Shareholder Sues SEAC Architects Over $4.75B Merger Alleging Undisclosed Info
A plaintiff has sued the architects of Sports Entertainment Acquisition Corp. (SEAC) in the Delaware Court of Chancery. The complaint alleges that the defendants intentionally withheld disclosures while pushing through a merger valued at $4.75 billion. The plaintiffs argue that the actual value of SEAC shares was much lower, leading to significant losses for shareholders.
The plaintiffs' legal team contends that the actual value of SEAC shares was closer to $6.72 per piece, not $10 as initially stated in the merger announcement. They argue that the defendants, including Vince McMahon and several WWE executives, encouraged shareholders not to exercise their redemption rights and to vote in favor of the merger. The defendants had sold the shares for just $1 per piece during the initial public offering and waived redemption rights for the founder's shares.
The defendants are accused of structuring SEAC to benefit from a bad deal. Eric Grubman, Chris Shumway, and John Collins are among those sued for allegedly manipulating the situation to trigger a decrease in share price after the merger. The standard timeframe for SPACs to complete a merger is two years, after which the shell company is liquidated if no partner is found. The plaintiffs believe the defendants were aware that a bad deal would be better for them than no deal and could maximize trust funds by limiting redemptions.
Super Group's preliminary results for Q4 2022 and FY 2022 showed a small year-on-year decline in several financial metrics. However, the company expressed optimism about the future. The plaintiffs seek damages for the difference between the value of redeemed shares and the actual value received in the merger.
The Delaware Court of Chancery will now consider the complaint, which names Vince McMahon, WWE executives, and other parties involved in the merger. The outcome could have significant implications for SEAC shareholders and the broader SPAC market.
