Cynosure shareholders sue to block $1B Hologic merger

Cynosure Inc. (NSDQ:CYNO) shareholders last week filed a class action lawsuit to halt the company’s proposed $1.44 billion sale to Hologic (NSDQ:HOLX), alleging that Cynosure’s regulatory filing recommending the transaction is missing crucial information about the company’s financial projections and the process that led up to the deal.

The complaint, filed in the U.S. District Court for Massachusetts, suggested that the filing is misleading and that shareholders don’t have enough information to ensure the proposed transaction is a good deal.

“Cynosure stockholders are being asked to make a decision whether to tender their shares in connection with the Offer without all material information at their disposal,” according to the complaint.

In the months leading up to the deal, Leerink Partners acted as financial advisor for Cynosure as they sought to reach a deal with number of companies. According to court documents, 1 of those companies entered a confidentiality agreement with Cynosure in May last year.

In November, Cynosure met with Hologic to discuss “potential future opportunities between the 2 companies” and by late January this year, Hologic was negotiating a takeover price, in competition with 2 other unnamed companies, according to the complaint.

Finally, in mid-February this year, Hologic and Cynosure inked a deal at $66 per share – an enterprise value of $1.44 billion. The lawsuit suggests that there is confusion over a potential confidentiality agreement signed between Cynosure and a 3rd company Feb. 10.

The purported class action also alleges that “the defendants filed a materially incomplete and misleading Recommendation Statement with the SEC and disseminated it to Cynosure’s stockholders.”

According to court documents, the regulatory filing omitted or misled investors about Cynosure’s financial projections, the data underlying the financial valuation analyses that supported Leerink’s fairness opinion and the background process that led to the proposed transaction.

Shareholders are asking the court to halt the transaction and award the plaintiffs “the costs of this action, including reasonable allowance for Plaintiff’s attorneys’ and experts’ fees.”

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