Verizon Communications Inc.
Verizon Communications Inc. Securities Settlement
The lawsuit was settled for additional disclosures in the proxy statement mailed to shareholders. The following is a summary of the proceedings in the lawsuit: ‘On September 2, 2013, Verizon publicly announced that it had entered into a definitive agreement (the Stock Purchase Agreement) with Vodafone Group Plc (Vodafone) to acquire Vodafone subsidiaries holding as their principal asset a 45% interest in Cellco Partnership d/b/a Verizon Wireless (Verizon Wireless) for a purchase price of approximately $130 billion, consisting primarily of cash and Verizon shares (the Transaction). On September 5, 2013, Plaintiff filed a complaint initiating the Action against Defendants in this Court alleging, among other things, that the members of the Verizon board of directors (the Verizon Board or Board) had breached their fiduciary duties in connection with the Transaction by, among other things, causing Verizon to pay an allegedly excessive and dilutive price in the Transaction in order to acquire the Vodafone subsidiaries. On October 8, 2013, Verizon filed a preliminary Proxy Statement on Schedule 14A with the Securities and Exchange Commission (SEC) (the Preliminary Proxy) disclosing the Verizon Board recommendation that the Company shareholders vote in favor of the Transaction and making various disclosures to Verizon shareholders regarding the shareholder vote. On October 22, 2013, Plaintiff filed an Amended Class Action Complaint incorporating all previous claims, and further asserting new claims for breach of fiduciary duty (i.e., duty of candor) in connection with the Preliminary Proxy, which was alleged to be materially misleading in various respects (the Complaint). Also on October 22, 2013, Plaintiff served a request for the production of documents to all Defendants. On November 5, 2013, Plaintiff filed with the Court a proposed Stipulation and Order for the Production and Exchange of Confidential Information (the Confidentiality Stipulation). Beginning on November 13, 2013, subject to the Confidentiality Stipulation, Defendants began providing Plaintiff on a rolling basis with certain non-public, confidential information regarding the Transaction as demanded by Plaintiff. During the course of the Action, Plaintiff counsel retained and consulted with a financial expert in connection with the prosecution of Plaintiff claims and reviewed with the expert the Preliminary Proxy, discovery materials, and relevant public information prior to entering into settlement discussions with Defendants. Counsel for Plaintiff also reviewed and analyzed over 13,000 pages of documents produced by Defendants, including but not limited to, e-mail communications, minutes of meetings by the Board, detailed financial presentations created by Morgan Stanley & Co. LLC (Morgan Stanley), J.P. Morgan Securities LLC, and Guggenheim Securities, LLC and management presentations to the Board. On November 21, 2013, counsel for Plaintiff sent a demand letter requesting that certain material information be disclosed in a supplement to the Preliminary Proxy filed with the SEC, and that the Board agree to certain actions. Then, as a result of those arm-length negotiations between the Parties, counsel reached an agreement in principle, the substantive terms of which were memorialized in a Memorandum of Understanding dated December 6, 2013 (the MOU), providing for settlement of the Action between and among Plaintiff, on behalf of herself and the Settlement Class (as defined below) of persons on behalf of whom Plaintiff brought the Action, and Defendants, subject to confirmatory discovery. Verizon then filed on December 10, 2013 a definitive Proxy Statement on Schedule 14A with the SEC (the Proxy Statement) to solicit shareholders to vote in favor of the Transaction and scheduling a shareholder vote for January 28, 2014. The Proxy Statement included a number of additional disclosures not contained in the Preliminary Proxy, certain of which (the Supplemental Disclosures) were made in response to the Complaint and the efforts of Plaintiff counsel. Additionally, as part of the MOU, Defendants agreed that upon such a time as this Settlement becomes final, and for a period of three (3) years thereafter, in the event that Verizon engages in a transaction involving the sale to a third party purchaser or spin-off of assets of Verizon Wireless having a book value of in excess of $14.4 billion (i.e., approximately 5% of $288.9 billion, which is the implied equity value of 100% of Verizon Wireless that is referenced under the heading Transaction Overview on page 38 of the Proxy Statement), Verizon shall obtain a fairness opinion from an independent financial advisor (or in the case of a spin-off, financial advice from an independent financial advisor) (the Future Actions). On January 28, 2014, Verizon shareholders voted to approve the issuance of shares for the Company to acquire Vodafone 45% interest in Verizon Wireless. Counsel for Plaintiff thereafter conducted depositions of representatives of Verizon and of Morgan Stanley, on February 14, 2014 and February 18, 2014, respectively. The stockholders of Verizon approved the issuance of Verizon shares in connection with the Transaction at a meeting held January 28, 2014. The Transaction closed on February 21, 2014. On October 6, 2014, the Court entered a scheduling order providing for, among other things, the scheduling of the Settlement Hearing, the provisional certification the Settlement Class (as defined below), a stay of the Action pending the Settlement Hearing, and an injunction against the commencement or prosecution of any action asserting any of the claims subject to the Settlement.’