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`Case No. ______________
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`JURY TRIAL DEMANDED
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`CLASS ACTION
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`Plaintiff,
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`COMPLAINT FOR VIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934
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`Case 1:20-cv-00327-UNA Document 1 Filed 03/03/20 Page 1 of 13 PageID #: 1
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`UNITED STATES DISTRICT COURT
`DISTRICT OF DELAWARE
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`JORDAN ROSENBLATT, Individually and
`On Behalf of All Others Similarly Situated,
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`v.
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`TIVO CORPORATION, JAMES E. MEYER,
`RAGHAVENDRA RAU, LAURA J. DURR,
`ALAN L. EARHART, EDDY W.
`HARTENSTEIN, DAN MOLONEY, DAVE
`SHULL, GLENN W. WELLING, LORIA B.
`YEADON, XPERI CORPORATION, XRAY-
`TWOLF HOLDCO CORPORATION, XRAY
`MERGER SUB CORPORATION, and
`TWOLF MERGER SUB CORPORATION,
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`
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`Defendants.
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`Plaintiff, by his undersigned attorneys, for this complaint against defendants, alleges upon
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`personal knowledge with respect to himself, and upon information and belief based upon, inter
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`alia, the investigation of counsel as to all other allegations herein, as follows:
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`NATURE OF THE ACTION
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`1.
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`This action stems from a proposed transaction announced on December 19, 2019
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`(the “Proposed Transaction”), pursuant to which TiVo Corporation (“TiVo” or the “Company”)
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`will be acquired by Xperi Corporation, XRAY-TWOLF HoldCo Corporation (“HoldCo”), XRAY
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`Merger Sub Corporation (“XRAY Merger Sub”), and TWOLF Merger Sub Corporation
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`(“TWOLF Merger Sub,” and collectively, “Xperi”).
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`2.
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`On December 18, 2019, TiVo’s Board of Directors (the “Board” or “Individual
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`Defendants”) caused the Company to enter into an agreement and plan of merger (the “Merger
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`Case 1:20-cv-00327-UNA Document 1 Filed 03/03/20 Page 2 of 13 PageID #: 2
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`Agreement”) with Xperi. Pursuant to the terms of the Merger Agreement, shareholders of TiVo
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`will receive 0.455 shares of HoldCo common stock.
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`3.
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`On February 18, 2020, defendants filed a Form S-4 Registration Statement (the
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`“Registration Statement”) with the United States Securities and Exchange Commission (“SEC”)
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`in connection with the Proposed Transaction.
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`4.
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`The Registration Statement omits material information with respect to the Proposed
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`Transaction, which renders the Registration Statement false and misleading. Accordingly, plaintiff
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`alleges herein that defendants violated Sections 14(a) and 20(a) of the Securities Exchange Act of
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`1934 (the “1934 Act”) in connection with the Registration Statement.
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`JURISDICTION AND VENUE
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`5.
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`This Court has jurisdiction over the claims asserted herein pursuant to Section 27
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`of the 1934 Act because the claims asserted herein arise under Sections 14(a) and 20(a) of the 1934
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`Act and Rule 14a-9.
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`6.
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`This Court has jurisdiction over defendants because each defendant is either a
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`corporation that conducts business in and maintains operations within this District, or is an
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`individual with sufficient minimum contacts with this District so as to make the exercise of
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`jurisdiction by this Court permissible under traditional notions of fair play and substantial justice.
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`7.
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`Venue is proper under 28 U.S.C. § 1391(b) because a substantial portion of the
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`transactions and wrongs complained of herein occurred in this District.
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`PARTIES
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`8.
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`Plaintiff is, and has been continuously throughout all times relevant hereto, the
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`owner of TiVo common stock.
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`2
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`Case 1:20-cv-00327-UNA Document 1 Filed 03/03/20 Page 3 of 13 PageID #: 3
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`9.
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`Defendant TiVo is a Delaware corporation and maintains its principal executive
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`offices at 2160 Gold Street, San Jose, California 95002. TiVo’s common stock is traded on the
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`NASDAQ Global Select Market under the ticker symbol “TIVO.”
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`10.
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`11.
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`12.
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`13.
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`14.
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`15.
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`16.
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`Company.
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`17.
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`18.
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`19.
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`Defendant James E. Meyer is Chairman of the Board of the Company.
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`Defendant Raghavendra Rau is Vice Chairman of the Board of the Company.
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`Defendant Laura J. Durr is a director of the Company.
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`Defendant Alan L. Earhart is a director of the Company.
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`Defendant Eddy W. Hartenstein is a director of the Company.
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`Defendant Dan Moloney is a director of the Company.
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`Defendant Dave Shull is President, Chief Executive Officer, and a director of the
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`Defendant Glenn W. Welling is a director of the Company.
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`Defendant Loria B. Yeadon is a director of the Company.
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`The defendants identified in paragraphs 10 through 18 are collectively referred to
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`herein as the “Individual Defendants.”
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`20.
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`Defendant Xperi Corporation is a Delaware corporation and a party to the Merger
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`Agreement.
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`21.
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`Defendant Holdco is a Delaware corporation, a jointly owned subsidiary of TiVo
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`and Xperi Corporation, and a party to the Merger Agreement.
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`22.
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`Defendant XRAY Merger Sub is a Delaware corporation, a wholly-owned
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`subsidiary of HoldCo, and a party to the Merger Agreement.
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`23.
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`Defendant TWOLF Merger Sub is a Delaware corporation, a wholly-owned
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`subsidiary of HoldCo, and a party to the Merger Agreement.
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`3
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`Case 1:20-cv-00327-UNA Document 1 Filed 03/03/20 Page 4 of 13 PageID #: 4
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`CLASS ACTION ALLEGATIONS
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`24.
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`Plaintiff brings this action as a class action on behalf of himself and the other public
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`stockholders of TiVo (the “Class”). Excluded from the Class are defendants herein and any person,
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`firm, trust, corporation, or other entity related to or affiliated with any defendant.
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`25.
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`26.
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`This action is properly maintainable as a class action.
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`The Class is so numerous that joinder of all members is impracticable. As of
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`December 16, 2019, there were approximately 126,666,160 shares of TiVo common stock
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`outstanding, held by hundreds, if not thousands, of individuals and entities scattered throughout
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`the country.
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`27.
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`Questions of law and fact are common to the Class, including, among others,
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`whether defendants will irreparably harm plaintiff and the other members of the Class if
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`defendants’ conduct complained of herein continues.
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`28.
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`Plaintiff is committed to prosecuting this action and has retained competent counsel
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`experienced in litigation of this nature. Plaintiff’s claims are typical of the claims of the other
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`members of the Class and plaintiff has the same interests as the other members of the Class.
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`Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately
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`protect the interests of the Class.
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`29.
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`The prosecution of separate actions by individual members of the Class would
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`create the risk of inconsistent or varying adjudications that would establish incompatible standards
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`of conduct for defendants, or adjudications that would, as a practical matter, be dispositive of the
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`interests of individual members of the Class who are not parties to the adjudications or would
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`substantially impair or impede those non-party Class members’ ability to protect their interests.
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`4
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`Case 1:20-cv-00327-UNA Document 1 Filed 03/03/20 Page 5 of 13 PageID #: 5
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`30.
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`Defendants have acted, or refused to act, on grounds generally applicable to the
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`Class as a whole, and are causing injury to the entire Class. Therefore, final injunctive relief on
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`behalf of the Class is appropriate.
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`Background of the Company and the Proposed Transaction
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`SUBSTANTIVE ALLEGATIONS
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`31.
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`TiVo provides an intellectual property portfolio and products to help consumers
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`watch entertainment.
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`32.
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`The Company’s products include movies, videos, and shows from across live TV,
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`on demand, streaming services, and apps.
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`33.
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`On December 18, 2019, TiVo’s Board caused the Company to enter into the Merger
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`Agreement with Xperi.
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`34.
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`Pursuant to the terms of the Merger Agreement, Tivo’s stockholders will receive
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`0.455 shares of Holdco common stock for each share of TiVo common stock they own.
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`35.
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`According to the press release announcing the Proposed Transaction:
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`Xperi Corporation (Nasdaq: XPER) and TiVo Corporation (Nasdaq: TIVO) today
`announced they entered into a definitive agreement to combine in an all-stock
`transaction, representing approximately $3 billion of combined enterprise value.
`The transaction creates a leading consumer and entertainment technology business
`and one of the industry’s largest intellectual property (IP) licensing platforms with
`a diverse portfolio of entertainment and semiconductor intellectual property.
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`The merger agreement provides for a 0.455 fixed exchange ratio, which implies a
`15% premium to TiVo’s shareholders based on each of Xperi’s and TiVo’s 90-day
`volume-weighted average share prices. At close, Xperi shareholders will own
`approximately 46.5% of the combined business, and TiVo shareholders will own
`approximately 53.5%. . . .
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`Transaction Details
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`Under the terms of the merger agreement, the shares of TiVo and Xperi
`stockholders will be converted into the shares of the new parent company based on
`a fixed exchange ratio of 0.455 Xperi share per existing TiVo share. Upon
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`5
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`Case 1:20-cv-00327-UNA Document 1 Filed 03/03/20 Page 6 of 13 PageID #: 6
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`completion of the merger, Xperi stockholders will own approximately 46.5% and
`TiVo stockholders will own approximately 53.5% of the new parent company on a
`fully diluted basis.
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`In connection with the transaction each company’s debt will be refinanced on a
`combined basis. To meet this objective, the companies have secured $1.1 billion of
`committed financing from Bank of America and Royal Bank of Canada.
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`Management and Board of Directors
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`Following the completion of the transaction, Xperi’s Chief Executive Officer, Jon
`Kirchner, will serve as Chief Executive Officer of the new parent company and
`Xperi’s CFO, Robert Andersen, will serve as Chief Financial Officer. TiVo’s Chief
`Executive Officer, David Shull, will continue as a strategic advisor to ensure a
`successful integration.
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`The Board of Directors of the new parent company will consist of seven directors,
`including Xperi CEO Jon Kirchner, in addition to three directors appointed by
`Xperi and three directors appointed by TiVo. The Chair of the Board will be
`selected by the independent directors of the Board.
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`The new parent company will assume the Xperi name but will continue to provide
`entertainment services under the TiVo brand, alongside Xperi’s premium DTS®,
`HD Radio®, and IMAX® Enhanced brands. The company will be headquartered
`in San Jose, California.
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`Timing and Approvals
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`This transaction has been approved by the Boards of Directors of both companies
`and is expected to close during the second quarter of 2020, subject to regulatory
`approvals, the approval by the shareholders of each company, and other customary
`closing conditions. . . .
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`Advisors
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`Centerview Partners, LLC served as exclusive financial advisor to Xperi and
`Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor. LionTree
`Advisors LLC served as exclusive financial advisor to TiVo and Cooley LLP
`served as legal advisor.
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`The Registration Statement Omits Material Information
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`36.
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`Defendants filed the Registration Statement with the SEC in connection with the
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`Proposed Transaction.
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`6
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`Case 1:20-cv-00327-UNA Document 1 Filed 03/03/20 Page 7 of 13 PageID #: 7
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`37.
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`As set forth below, the Registration Statement omits material information with
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`respect to the Proposed Transaction, which renders the Registration Statement false and
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`misleading.
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`38.
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`First, the Registration Statement omits material information regarding the
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`Company’s, Xperi’s, and the combined company’s financial projections.
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`39. With respect to the Company’s financial projections, the Registration Statement
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`fails to disclose, for each set of projections: (i) all line items used to calculate (a) Adjusted
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`EBITDA, (b) EBIT, and (c) Unlevered Free Cash Flow; and (ii) a reconciliation of all non-GAAP
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`to GAAP metrics.
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`40. With respect to Xperi’s financial projections, the Registration Statement fails to
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`disclose, for each set of projections: (i) all line items used to calculate (a) Billings, (b) Adjusted
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`EBITDA, and (c) Unlevered Free Cash Flow; and (ii) a reconciliation of all non-GAAP to GAAP
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`metrics.
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`41. With respect to the combined company’s financial projections, the Registration
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`Statement fails to disclose: (i) all line items used to calculate (a) Billings and (b) Adjusted
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`EBITDA; (ii) Unlevered Free Cash Flow and all underlying line items; and (iii) a reconciliation of
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`all non-GAAP to GAAP metrics.
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`42.
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`The disclosure of projected financial information is material because it provides
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`stockholders with a basis to project the future financial performance of a company, and allows
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`stockholders to better understand the financial analyses performed by the company’s financial
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`advisor in support of its fairness opinion.
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`43.
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`Second, the Registration Statement omits material information regarding the
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`analyses performed by the Company’s financial advisor in connection with the Proposed
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`7
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`Case 1:20-cv-00327-UNA Document 1 Filed 03/03/20 Page 8 of 13 PageID #: 8
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`Transaction, LionTree Advisors LLC (“LionTree”).
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`44. With respect to LionTree’s Sum-of-the-Parts DCF Analysis of the Company, the
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`Registration Statement fails to disclose: (i) all line items used to calculate unlevered free cash
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`flows; (ii) the terminal values; (iii) LionTree’s basis for applying ranges of terminal multiples of
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`8.0x to 10.0x and 4.75x to 5.75x; (iv) the individual inputs and assumptions underlying the
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`discount rates ranging from 9.0% to 11.0%; (v) the estimated consolidated net debt used by
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`LionTree in the analysis; and (vi) the number of fully diluted shares outstanding of TiVo common
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`stock.
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`45. With respect to LionTree’s Sum-of-the-Parts DCF Analysis of Xperi, the
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`Registration Statement fails to disclose: (i) all line items used to calculate unlevered free cash
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`flows; (ii) the terminal values; (iii) LionTree’s basis for applying ranges of terminal multiples of
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`9.0x to 11.0x and 3.0x to 5.0x; (iv) the individual inputs and assumptions underlying the discount
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`rates ranging from 8.75% to 10.75%; (v) the estimated consolidated net debt used by LionTree in
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`the analysis; and (vi) the number of fully diluted shares outstanding of Xperi common stock.
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`46. With respect to LionTree’s Pro Forma Financial Analyses, the Registration
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`Statement fails to disclose: (i) the individual inputs and assumptions underlying the discount rates
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`ranging from 8.9% to 10.9%; (ii) the terminal values; and (iii) LionTree’s basis for applying ranges
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`of terminal value multiples of 6.0x to 8.0x and 7.0x to 9.0x.
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`47. When a banker’s endorsement of the fairness of a transaction is touted to
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`shareholders, the valuation methods used to arrive at that opinion as well as the key inputs and
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`range of ultimate values generated by those analyses must also be fairly disclosed.
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`48.
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`Third, the Registration Statement omits material information regarding potential
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`conflicts of interest of LionTree.
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`8
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`Case 1:20-cv-00327-UNA Document 1 Filed 03/03/20 Page 9 of 13 PageID #: 9
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`49.
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`The Registration Statement fails to disclose whether LionTree has provided past
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`services to Xperi or its affiliates, as well as the timing and nature of such services and the amount
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`of compensation LionTree received for providing such services.
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`50.
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`Full disclosure of investment banker compensation and all potential conflicts is
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`required due to the central role played by investment banks in the evaluation, exploration,
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`selection, and implementation of strategic alternatives.
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`51.
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`Fourth, the Registration Statement fails to disclose whether the Company entered
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`into any nondisclosure agreements that contained standstill and/or “don’t ask, don’t waive”
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`provisions that are or were preventing the counterparties from submitting superior offers to acquire
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`the Company.
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`52. Without this information, stockholders may have the mistaken belief that, if these
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`potentially interested parties wished to come forward with a superior offer, they are or were
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`permitted to do so, when in fact they are or were contractually prohibited from doing so.
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`53.
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`The omission of the above-referenced material information renders the Registration
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`Statement false and misleading, including, inter alia, the following sections of the Registration
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`Statement: (i) Background of the Mergers; (ii) Recommendation of the TiVo Board of Directors;
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`(iii) Opinion of TiVo’s Financial Advisor; and (iv) Financial Forecasts.
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`54.
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`The above-referenced omitted information, if disclosed, would significantly alter
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`the total mix of information available to the Company’s stockholders.
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`COUNT I
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`Claim for Violation of Section 14(a) of the 1934 Act and Rule 14a-9 Promulgated
`Thereunder Against the Individual Defendants and TiVo
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`55.
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`Plaintiff repeats and realleges the preceding allegations as if fully set forth herein.
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`9
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`56.
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`The Individual Defendants disseminated the false and misleading Registration
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`Statement, which contained statements that, in violation of Section 14(a) of the 1934 Act and Rule
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`14a-9, in light of the circumstances under which they were made, omitted to state material facts
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`necessary to make the statements therein not materially false or misleading. TiVo is liable as the
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`issuer of these statements.
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`57.
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`The Registration Statement was prepared, reviewed, and/or disseminated by the
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`Individual Defendants. By virtue of their positions within the Company, the Individual Defendants
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`were aware of this information and their duty to disclose this information in the Registration
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`Statement.
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`58.
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`The Individual Defendants were at least negligent in filing the Registration
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`Statement with these materially false and misleading statements.
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`59.
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`The omissions and false and misleading statements in the Registration Statement
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`are material in that a reasonable stockholder will consider them important in deciding how to vote
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`on the Proposed Transaction. In addition, a reasonable investor will view a full and accurate
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`disclosure as significantly altering the total mix of information made available in the Registration
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`Statement and in other information reasonably available to stockholders.
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`60.
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`The Registration Statement is an essential link in causing plaintiff and the
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`Company’s stockholders to approve the Proposed Transaction.
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`61.
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`By reason of the foregoing, defendants violated Section 14(a) of the 1934 Act and
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`Rule 14a-9 promulgated thereunder.
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`62.
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`Because of the false and misleading statements in the Registration Statement,
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`plaintiff and the Class are threatened with irreparable harm.
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`10
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`Case 1:20-cv-00327-UNA Document 1 Filed 03/03/20 Page 11 of 13 PageID #: 11
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`COUNT II
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`Claim for Violation of Section 20(a) of the 1934 Act
`Against the Individual Defendants and Xperi
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`63.
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`64.
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`Plaintiff repeats and realleges the preceding allegations as if fully set forth herein.
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`The Individual Defendants and Xperi acted as controlling persons of TiVo within
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`the meaning of Section 20(a) of the 1934 Act as alleged herein. By virtue of their positions as
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`officers and/or Board members of TiVo and participation in and/or awareness of the Company’s
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`operations and/or intimate knowledge of the false statements contained in the Registration
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`Statement, they had the power to influence and control and did influence and control, directly or
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`indirectly, the decision making of the Company, including the content and dissemination of the
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`various statements that plaintiff contends are false and misleading.
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`65.
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`Each of the Individual Defendants and Xperi was provided with or had unlimited
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`access to copies of the Registration Statement alleged by plaintiff to be misleading prior to and/or
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`shortly after these statements were issued and had the ability to prevent the issuance of the
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`statements or cause them to be corrected.
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`66.
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`In particular, each of the Individual Defendants had direct and supervisory
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`involvement in the day-to-day operations of the Company, and, therefore, is presumed to have had
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`the power to control and influence the particular transactions giving rise to the violations as alleged
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`herein, and exercised the same. The Registration Statement contains the unanimous
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`recommendation of the Individual Defendants to approve the Proposed Transaction. They were
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`thus directly involved in the making of the Registration Statement.
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`67.
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`Xperi also had supervisory control over the composition of the Registration
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`Statement and the information disclosed therein, as well as the information that was omitted and/or
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`misrepresented in the Registration Statement.
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`11
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`68.
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`By virtue of the foregoing, the Individual Defendants and Xperi violated Section
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`20(a) of the 1934 Act.
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`69.
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`As set forth above, the Individual Defendants and Xperi had the ability to exercise
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`control over and did control a person or persons who have each violated Section 14(a) of the 1934
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`Act and Rule 14a-9, by their acts and omissions as alleged herein. By virtue of their positions as
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`controlling persons, these defendants are liable pursuant to Section 20(a) of the 1934 Act. As a
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`direct and proximate result of defendants’ conduct, plaintiff and the Class are threatened with
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`irreparable harm.
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`PRAYER FOR RELIEF
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`WHEREFORE, plaintiff prays for judgment and relief as follows:
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`A.
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`Preliminarily and permanently enjoining defendants and all persons acting in
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`concert with them from proceeding with, consummating, or closing the Proposed Transaction;
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`B.
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`In the event defendants consummate the Proposed Transaction, rescinding it and
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`setting it aside or awarding rescissory damages;
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`C.
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`Directing the Individual Defendants to disseminate a Registration Statement that
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`does not contain any untrue statements of material fact and that states all material facts required in
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`it or necessary to make the statements contained therein not misleading;
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`D.
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`Declaring that defendants violated Sections 14(a) and/or 20(a) of the 1934 Act, as
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`well as Rule 14a-9 promulgated thereunder;
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`E.
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`Awarding plaintiff the costs of this action, including reasonable allowance for
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`plaintiff’s attorneys’ and experts’ fees; and
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`F.
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`Granting such other and further relief as this Court may deem just and proper.
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`Case 1:20-cv-00327-UNA Document 1 Filed 03/03/20 Page 13 of 13 PageID #: 13
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`Plaintiff hereby requests a trial by jury on all issues so triable.
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`JURY DEMAND
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`Dated: March 3, 2020
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`OF COUNSEL:
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`RM LAW, P.C.
`Richard A. Maniskas
`1055 Westlakes Drive, Suite 300
`Berwyn, PA 19312
`Telephone: (484) 324-6800
`Facsimile: (484) 631-1305
`Email: rm@maniskas.com
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`By:
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`
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`RIGRODSKY & LONG, P.A.
`
`/s/ Gina M. Serra
`Brian D. Long (#4347)
`Gina M. Serra (#5387)
`300 Delaware Avenue, Suite 1220
`Wilmington, DE 19801
`Telephone: (302) 295-5310
`Facsimile: (302) 654-7530
`Email: bdl@rl-legal.com
`Email: gms@rl-legal.com
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`Attorneys for Plaintiff
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