Windstream Corp. has inked a memorandum of understanding laying to rest a shareholder class action challenging its proposed takeover of Paetec Holding Corp, Windstream officials said Friday afternoon.
Terms of the MOU call for new disclosures to be added to information related to the merger revealed in previously filed proxies. All parties including Paetec and officers of Windstream and Paetec to be released from liability and for the lawsuit, filed in a Delaware state court, to be dismissed without the possibility of the complaint being refiled.
“Windstream, Paetec and the other defendants deny all of the allegations in the Consolidated Lawsuit and believe the disclosures in the proxy statement/prospectus are adequate under the law. Nevertheless, Windstream, Paetec and the other defendants have agreed to settle the consolidated lawsuit in order to avoid costly litigation and reduce the risk of any delay to the completion of the merger,” Windstream official said in a statement.
The Windstream statement makes no mention of financial terms. Windstream officials on Friday could not immediately be reached.
Settlements in merger-related shareholder class actions such as the Windstream suit often call for defendants to make additional disclosures but no financial concessions outside of fees collected by plaintiffs’ attorneys and modest sums paid to a few would-be lead plaintiffs.
Among new disclosures added as a result of the settlement are that Paetec chairman and CEO Arunas Chesonis stated in a July 8 meeting that he had no intention of joining Windstream after a merger and that after entering an exclusivity agreement with Windstream, Paetec was contractually prohibited from talking to another suitor, identified in the proxy only as “Company B.”
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