US: Molson Coors facing lawsuit over merger
Molson Coors is facing legal action from some of its investors following the recent merger to create the company.
The law firm of Milberg Weiss Bershad & Schulman filed a class action lawsuit on Friday (13 May) on behalf of not only former shareholders of Molson who received shares of Molson Coors Brewing Company as a result of the merger, but also open market purchasers of the common stock of Coors and open market purchasers of the common stock of the company, following completion of the merger.
The investors claim they have been damaged by the decline in the company's stock.
The complaint alleges that, in order to get the necessary shareholder approval for the merger between Coors and Molson, defendants failed to disclose that, at the time the merger, "Coors was not operating according to plan and had experienced material adverse changes in its business."
It also claims that the defendants violated the terms of the merger agreement and Proxy/Prospectus by failing to disclose that Coors's business "was being, and foreseeably would continue to be, adversely impacted by conditions that were causing Coors to perform well below plan and consensus estimates."
"Defendants concealed these material facts because it enabled them to effectuate the merger in a manner that allowed the relatives and heirs of the Coors and Molson families to dominate the combined Company, as detailed in the complaint," a statement from the lawyers said.
The statement continued by explaining that immediately following what it described as disappointing results, shares of the company fell precipitously, almost US$14.50 per share, to US$63.00 per share, a decline of almost 20%.
The statement said the fall in share price was "testament to investors' surprise and disappointment in the results".
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