Case 1:21-cv-00379-UNA Document 1 Filed 03/15/21 Page 1 of 11 PageID #: 1
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`UNITED STATES DISTRICT COURT
`DISTRICT OF DELAWARE
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`TRAVIS LEE,
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`Plaintiff,
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`COMPLAINT FOR VIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934
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`v.
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`GLU MOBILE INC., NICCOLO DE MASI,
`NICK EARL, ERIC BALL, ANN MATHER,
`HANY NADA, BENJAMIN T. SMITH, IV,
`GREG BRANDEAU, BEN FEDER, GABY
`TOLEDANO, and DARLA K. ANDERSON,
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`Defendants.
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`Case No. ______________
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`JURY TRIAL DEMANDED
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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 February 8, 2021 (the
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`“Proposed Transaction”), pursuant to which Glu Mobile Inc. (“Glu Mobile” or the “Company”)
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`will be acquired by Electronic Arts Inc. (“Parent”) and Giants Acquisition Sub, Inc. (“Merger
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`Sub,” and together with Parent, “Electronic Arts”).
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`2.
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`On February 8, 2021, Glu Mobile’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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`Agreement”) with Electronic Arts. Pursuant to the terms of the Merger Agreement, Glu Mobile’s
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`stockholders will receive $12.50 in cash for each share of Glu Mobile common stock they own.
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`3.
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`On March 12, 2021, defendants filed a proxy statement (the “Proxy Statement”)
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`with the United States Securities and Exchange Commission (the “SEC”) in connection with the
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`Proposed Transaction.
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`4.
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`The Proxy Statement omits material information with respect to the Proposed
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`Transaction, which renders the Proxy 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 Proxy 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 portion of the transactions
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`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 Glu Mobile common stock.
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`9.
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`Defendant Glu Mobile is a Delaware corporation and maintains its principal
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`executive offices at 875 Howard Street, Suite 100, San Francisco, California 94103. Glu Mobile’s
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`common stock is traded on the NASDAQ under the ticker symbol “GLUU.”
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`10.
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`11.
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`Company.
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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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`17.
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`18.
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`19.
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`20.
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`Defendant Niccolo de Masi is Chiarman of the Board of the Company.
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`Defendant Nick Earl is Chief Executive Officer, President, and a director of the
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`Defendant Eric Ball is a director of the Company.
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`Defendant Ann Mather is a director of the Company.
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`Defendant Hany Nada is a director of the Company.
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`Defendant Benjamin T. Smith, IV is a director of the Company.
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`Defendant Greg Brandeau is a director of the Company.
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`Defendant Ben Feder is a director of the Company.
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`Defendant Gaby Toledano is a director of the Company.
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`Defendant Darla K. Anderson is a director of the Company.
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`The defendants identified in paragraphs 10 through 19 are collectively referred to
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`herein as the “Individual Defendants.”
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`Background of the Company and the Proposed Transaction
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`SUBSTANTIVE ALLEGATIONS
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`21.
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`22.
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`Glu Mobile is a leading developer and publisher of mobile games.
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`The Company’s diverse portfolio features top-grossing and award-winning original
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`and licensed IP titles, including: Covet Fashion, Deer Hunter, Design Home, Diner DASH
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`Adventures, Disney Sorcerer’s Arena, Kim Kardashian: Hollywood, and MLB Tap Sports
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`Baseball, which are available worldwide on various platforms including the App Store and Google
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`Play.
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`23.
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`On February 8, 2021, Glu Mobile’s Board caused the Company to enter into the
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`Merger Agreement with Electronic Arts.
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`24.
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`Pursuant to the terms of the Merger Agreement, Glu Mobile’s stockholders will
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`receive $12.50 in cash for each share of Glu Mobile common stock they own.
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`25.
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`According to the press release announcing the Proposed Transaction:
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`Electronic Arts Inc. (NASDAQ: EA), a global leader in interactive entertainment,
`and Glu Mobile Inc. (NASDAQ: GLUU), a leading global developer and publisher
`of mobile games including Design Home, Covet Fashion, and MLB Tap Sports
`Baseball, have entered into a definitive agreement under which Electronic Arts will
`acquire Glu Mobile. Under the terms of the agreement, EA will acquire Glu for
`$2.1 billion in enterprise value. Glu stockholders will receive $12.50 in cash for
`each share of Glu stock, representing a 36% premium to Glu’s closing share price
`on February 5, 2021. Upon closing, the acquisition will be immediately accretive
`to Electronic Arts’ total net bookings, and is expected to grow underlying
`profitability beginning in its first year. . . .
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`Details on the Proposed Transaction
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`The board of directors of each of Electronic Arts and Glu Mobile have approved
`the transaction and the Glu board recommends that Glu stockholders approve the
`transaction and adopt the merger agreement. Under the terms of the agreement, Glu
`stockholders will receive $12.50 in cash for each share of Glu stock, representing
`an equity value of $2.4 billion, and a total enterprise value of $2.1 billion including
`Glu's' net cash of $364 million. The transaction is anticipated to close in the quarter
`ending June 30, 2021, subject to approval by the Glu stockholders, the receipt of
`required regulatory approvals and other customary closing conditions. . . .
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`Advisors
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`J.P. Morgan Securities LLC is serving as exclusive financial advisor to Electronic
`Arts and Simpson, Thacher & Bartlett LLP is serving as legal counsel to Electronic
`Arts. Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and UBS Securities
`LLC are serving as financial advisors to Glu. Fenwick & West LLP is serving as
`legal counsel to Glu.
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`The Proxy Statement Omits Material Information, Rendering It False and Misleading
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`26.
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`Defendants filed the Proxy Statement with the SEC in connection with the Proposed
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`Transaction.
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`27.
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`As set forth below, the Proxy Statement omits material information.
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`28.
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`First, the Proxy Statement omits material information regarding the Company’s
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`financial projections.
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`29.
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`The Proxy Statement fails to disclose, for each set of projections: (i) all line items
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`used to calculate bookings and adjusted EBITDA; and (ii) a reconciliation of all non-GAAP to
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`GAAP metrics.
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`30.
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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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`31.
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`Second, the Proxy Statement omits material information regarding the analyses
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`performed by the Company’s financial advisors, Goldman Sachs & Co. LLC (“Goldman Sachs”)
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`and Morgan Stanley & Co. LLC (“Morgan Stanley”).
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`32. With respect to Goldman Sachs’ Illustrative Discounted Cash Flow Analysis, the
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`Proxy Statement fails to disclose: (i) the terminal values for the Company; (ii) the individual inputs
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`and assumptions underlying the discount rates and perpetuity growth rates used in the analysis;
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`(iii) the net cash used in the analysis; and (iv) the fully diluted shares of Glu Mobile common
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`stock.
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`33. With respect to Goldman Sachs’ Illustrative Present Value of Future Share Price
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`Analysis, the Proxy Statement fails to disclose: (i) the net debt used in the analysis; and (ii) the
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`individual inputs and assumptions underlying the discount rate used in the analysis.
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`34. With respect to Goldman Sachs’ Selected Precedent Transactions Analysis, the
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`Proxy Statement fails to disclose: (i) the closing dates of the transactions; (ii) the total values of
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`the transactions; (iii) the net cash used in the analysis; and (iv) the fully diluted shares of Glu
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`Mobile common stock.
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`35. With respect to Goldman Sachs’ Premia Paid Analysis, the Proxy Statement fails
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`to disclose: (i) the transactions observed in the analysis; and (ii) the premiums paid in the
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`transactions.
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`36. With respect to Morgan Stanley’s Public Trading Comparables Analysis, the Proxy
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`Statement fails to disclose: (i) the cash and debt used in the analysis; and (ii) the outstanding shares
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`of Glu Mobile common stock on a fully-diluted basis.
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`37. With respect to Morgan Stanley’s Discounted Equity Value Analysis, the Proxy
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`Statement fails to disclose: (i) the individual inputs and assumptions underlying the discount rate
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`used in the analysis; (ii) projected net cash; and (iii) the outstanding shares of Glu Mobile common
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`stock on a fully-diluted basis.
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`38. With respect to Morgan Stanley’s Discounted Cash Flow Analysis, the Proxy
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`Statement fails to disclose: (i) the terminal values for the Company; (ii) the individual inputs and
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`assumptions underlying the discount rates used in the analysis; (iii) the Company’s cash and debt;
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`and (iv) the outstanding shares of Glu Mobile common stock on a fully-diluted basis.
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`39. With respect to Morgan Stanley’s Precedent Transactions Analysis, the Proxy
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`Statement fails to disclose: (i) the total values of the transactions; and (ii) the announcement and
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`closing dates of the transactions.
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`40. With respect to Morgan Stanley’s Illustrative Precedent Premiums analysis, the
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`Proxy Statement fails to disclose: (i) the transactions observed in the analysis; and (ii) the
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`premiums paid in the transactions.
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`41. With respect to Morgan Stanley’s Equity Research Analysts’ Future Price Targets
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`analysis, the Proxy Statement fails to disclose: (i) the price targets observed in the analysis; and
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`(ii) the sources thereof.
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`42. 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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`43.
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`Third, the Proxy Statement omits material information regarding the Company’s
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`additional financial advisor, UBS Securities LLC (“UBS”).
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`44.
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`The Proxy Statement fails to disclose the terms of UBS’s engagement, including:
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`(i) the amount of compensation UBS has received or will receive in connection with its
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`engagement; (ii) the amount of UBS’s compensation that is contingent upon the consummation of
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`the Proposed Transaction; (iii) whether UBS has performed past services for any parties to the
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`Merger Agreement or their affiliates; (iv) the timing and nature of such services; and (v) the
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`amount of compensation received by UBS for providing such services.
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`45.
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`The omission of the above-referenced material information renders the Proxy
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`Statement false and misleading.
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`46.
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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 Glu Mobile
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`47.
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`48.
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`Plaintiff repeats and realleges the preceding allegations as if fully set forth herein.
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`The Individual Defendants disseminated the false and misleading Proxy Statement,
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`which contained statements that, in violation of Section 14(a) of the 1934 Act and Rule 14a-9, in
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`light of the circumstances under which they were made, omitted to state material facts necessary
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`to make the statements therein not materially false or misleading. Glu Mobile is liable as the issuer
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`of these statements.
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`49.
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`The Proxy 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 Proxy Statement.
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`50.
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`The Individual Defendants were at least negligent in filing the Proxy Statement
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`with these materially false and misleading statements.
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`51.
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`The omissions and false and misleading statements in the Proxy Statement are
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`material in that a reasonable stockholder will consider them important in deciding how to vote on
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`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 Proxy
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`Statement and in other information reasonably available to stockholders.
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`52.
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`The Proxy Statement is an essential link in causing plaintiff to approve the Proposed
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`Transaction.
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`53.
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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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`54.
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`Because of the false and misleading statements in the Proxy Statement, plaintiff is
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`threatened with irreparable harm.
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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
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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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`56.
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`The Individual Defendants acted as controlling persons of Glu Mobile within the
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`meaning of Section 20(a) of the 1934 Act as alleged herein. By virtue of their positions as officers
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`and/or directors of Glu Mobile and participation in and/or awareness of the Company’s operations
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`and/or intimate knowledge of the false statements contained in the Proxy Statement, they had the
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`power to influence and control and did influence and control, directly or indirectly, the decision
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`making of the Company, including the content and dissemination of the various statements that
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`plaintiff contends are false and misleading.
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`57.
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`Each of the Individual Defendants was provided with or had unlimited access to
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`copies of the Proxy Statement alleged by plaintiff to be misleading prior to and/or shortly after
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`these statements were issued and had the ability to prevent the issuance of the statements or cause
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`them to be corrected.
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`58.
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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 Proxy Statement contains the unanimous recommendation of
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`the Individual Defendants to approve the Proposed Transaction. They were thus directly involved
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`in the making of the Proxy Statement.
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`59.
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`By virtue of the foregoing, the Individual Defendants violated Section 20(a) of the
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`1934 Act.
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`60.
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`As set forth above, the Individual Defendants had the ability to exercise control
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`over and did control a person or persons who have each violated Section 14(a) of the 1934 Act and
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`Rule 14a-9, by their acts and omissions as alleged herein. By virtue of their positions as controlling
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`persons, these defendants are liable pursuant to Section 20(a) of the 1934 Act. As a direct and
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`proximate result of defendants’ conduct, plaintiff is threatened with 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 Proxy Statement that does not
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`contain any untrue statements of material fact and that states all material facts required in it or
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`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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`JURY DEMAND
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`Plaintiff hereby requests a trial by jury on all issues so triable.
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`Dated: March 15, 2021
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`By:
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`RIGRODSKY LAW, P.A.
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`/s/ Gina M. Serra
`Seth D. Rigrodsky (#3147)
`Gina M. Serra (#5387)
`Herbert W. Mondros (#3308)
`300 Delaware Avenue, Suite 210
`Wilmington, DE 19801
`Telephone: (302) 295-5310
`Facsimile: (302) 654-7530
`Email: sdr@rl-legal.com
`Email: gms@rl-legal.com
`Email: hwm@rl-legal.com
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`Attorneys for Plaintiff
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