An investor in Redfin (NASDAQ: RDFN) has filed a lawsuit to stop its $1.75 billion sale to Rocket Companies (NYSE: RKT).
The Real Deal reports investor Bruce Miller is suing the company and its board of directors, including CEO Glenn Kelman, alleging they failed to disclose important information regarding the financial forecasts for the companies, both individually and as a merged entity. The lawsuit also alleges Goldman Sachs, the financial advisor on the transaction, failed to acknowledge its conflict of interest in the deal and its data supporting the transaction.
“When an advisor stands to earn fees through a separate financial deal if a proposed transaction is completed, this incentivizes the advisor to push a transaction through regardless of its merits,” the lawsuit said. “Thus, Goldman Sachs was incentivized to push for and recommend the Proposed Transaction in order to receive its advisory fee and the potential undisclosed ‘gain’ from the Capped Call Transactions.”
Miller’s lawsuit seeks to halt the sale until the information that he claimed was omitted is restored “truthfully and completely.” The litigation followed the announcement by the Halper Sadeh of an investigation to determine if the exchange rate of Redfin for Rocket shares is a fair value to shareholders.
Glad to see someone speaking up.