Advo Could Face Class-Action Suit
Direct-mailer Advo could face a class-action suit charging that Advo misrepresented its financial health when negotiating its $1.3 billion sale to Valassis.
A Los Angeles law firm filed suit on Sept. 28 on behalf of shareholders who bought Advo stock after its sale to Valassis was announced on July 6, and before Valassis sued Advo on Aug. 30 to rescind the deal (PROMO Xtra, Sept. 1, 2006). Advo counter-sued to force the sale, then held a special stockholders meeting on Sept. 13 to approval the deal (PROMO Xtra, Sept. 12, 2006).
Advo and Valassis go to trial on those suits on Dec. 11 in Delaware Chancery Court.
Meanwhile, the shareholders’ suit, filed by Yourman Alexander & Parekh in U.S. District Court for the District of Connecticut, seeks class-action status for shareholders who bought Advo stock between July 6 and Aug. 30. The law firm is seeking a shareholder to act as lead plaintiff in the case, with a decision expected by mid-November. The suit argues that shareholders bought stock believing the merger would go through, but were allegedly given a false impression of Advo’s financial health. Advo’s stock rose to $36.80 per share after the sale was announced, but fell to $29 a share when Valassis filed suit to block the deal.
Advo did not return a call for comment.
