Case 1:21-cv-00946-UNA Document 1 Filed 06/29/21 Page 1 of 19 PageID #: 1
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`SUSAN FINGER,
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`Plaintiff,
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`Case No._______________
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`v.
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`UNITED STATES DISTRICT COURT
`DISTRICT OF DELAWARE
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`Plaintiff Susan Finger (“Plaintiff”), by and through her undersigned counsel, for her
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`CONSTELLATION
`PHARMACEUTICALS, INC., SCOTT N.
`BRAUNSTEIN, MARK A. GOLDSMITH,
`JIGAR RAYTHATHA, RICHARD S.
`LEVY, ELIZABETH G. TRÈHU, JAMES
`E. AUDIA, and STEVEN L. HOERTER,
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`COMPLAINT FOR VIOLATIONS OF
`THE FEDERAL SECURITIES LAWS
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`
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`JURY TRIAL DEMANDED
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`Defendants.
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`
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`complaint against defendants, alleges upon personal knowledge with respect to herself, and upon
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`information and belief based upon, inter alia, the investigation of counsel as to all other allegations
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`herein, as follows:
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`NATURE OF THE ACTION
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`1.
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`Plaintiff brings
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`this action against Constellation Pharmaceuticals,
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`Inc.
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`(“Constellation” or the “Company”) and the members of its Board of Directors (the “Board” or
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`the “Individual Defendants”) for their violations of Sections 14(d)(4), 14(e) and 20(a) of the
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`Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§ 78n(d)(4), 78n(e), 78t(a),
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`and U.S. Securities and Exchange Commission (“SEC”) Rule 14d-9, 17 C.F.R. §240.14d-9(d)
`(“Rule 14d-9”), and to enjoin the expiration of a tender offer (the “Tender Offer”) on a proposed
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`transaction, pursuant to which Constellation will be acquired by MorphoSys AG (“MorphoSys”),
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`through its subsidiary MorphoSys Development Inc. (“Purchaser”) (the “Proposed Transaction”).
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`2.
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`On June 2, 2021, Constellation and MorphoSys issued a joint press release
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`announcing that they had entered into an Agreement and Plan of Merger (the “Merger Agreement”)
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`dated June 2, 2021, to sell Constellation to MorphoSys. Under the terms of the Merger Agreement,
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`MorphoSys will acquire all outstanding shares of Constellation for $34.00 in cash per share of
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`Constellation common stock (the “Offer Price”). Pursuant to the Merger Agreement, Purchaser
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`commenced the Tender Offer on June 16, 2021. The Tender Offer is scheduled to expire at one
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`minute after 11:59 p.m. New York City Time on July 14, 2021. The Proposed Transaction is
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`valued at approximately $1.7 billion.
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`3.
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`On June 16, 2021, Constellation filed a Solicitation/Recommendation Statement on
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`Schedule 14D-9 (the “Recommendation Statement”) with the SEC. The Recommendation
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`Statement, which recommends that Constellation stockholders tender their shares in the Tender
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`Offer, omits or misrepresents material information concerning, among other things: (i)
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`Constellation management’s financial projections, relied upon by the Company’s financial
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`advisor, Centerview Partners LLC (“Centerview”) in its financial analyses; (ii) the data and inputs
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`underlying the financial valuation analyses that support the fairness opinion provided by
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`Centerview; and (iii) the background of the Proposed Transaction. Defendants authorized the
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`issuance of the false and misleading Recommendation Statement in violation of Sections 14(d),
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`14(e) and 20(a) of the Exchange Act.
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`4.
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`In short, the Proposed Transaction will unlawfully divest Constellation’s public
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`stockholders of the Company’s valuable assets without fully disclosing all material information
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`concerning the Proposed Transaction to Company stockholders. To remedy defendants’ Exchange
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`Act violations, Plaintiff seeks to enjoin the expiration of the Tender Offer unless and until such
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`problems are remedied.
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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 for violations of Sections
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`14(d)(4), 14(e) and 20(a) of the Exchange Act and SEC Rule 14d-9 promulgated thereunder
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`pursuant to Section 27 of the Exchange Act, 15 U.S.C. § 78aa, and 28 U.S.C. § 1331 (federal
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`question jurisdiction).
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`6.
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`This Court has jurisdiction over the 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 in this District pursuant to 28 U.S.C. § 1391 because defendants
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`are found or are inhabitants or transact business in this District.
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`PARTIES
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`8.
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`Plaintiff is, and has been at all times relevant hereto, a continuous stockholder of
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`Constellation.
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`9.
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`Defendant Constellation is a Delaware corporation, with its principal executive
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`offices located at 215 First Street, Suite 200, Cambridge, Massachusetts 02142. Constellation is a
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`clinical-stage biopharmaceutical company developing novel therapeutics. Constellation’s
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`common stock is traded on the Nasdaq Global Select Market under the ticker symbol “CNST.”
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`10.
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`Defendant Scott N. Braunstein (“Braunstein”) has been a director of the Company
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`since February 2019.
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`11.
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`Defendant Mark A. Goldsmith (“Goldsmith”) has been a director of the Company
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`since July 2009. Defendant Goldsmith also previously served as President and Chief Executive
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`Officer (“CEO”) of the Company from June 2009 to March 2012 and as Interim Executive
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`Chairman from June 2016 to March 2017.
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`12.
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`Defendant Jigar Raythatha (“Raythatha”) has been President, CEO, and a director
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`of the Company since March 2017. Defendant Raythatha also previously served as the Company’s
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`Head of Corporate Development from March 2009 to February 2013.
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`13.
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`Defendant Richard S. Levy (“Levy”) has been a director of the Company since
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`April 2020.
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`14.
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`Defendant Elizabeth G. Tréhu (“Tréhu”) has been a director of the Company since
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`September 2018.
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`15.
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`Defendant James E. Audia (“Audia”) has been a director of the Company since July
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`2017.
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`16.
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`Defendant Steven L. Hoerter (“Hoerter”) has been a director of the Company since
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`September 2018.
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`17.
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`Defendants identified in paragraphs 10 to 16 are collectively referred to herein as
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`the “Board” or the “Individual Defendants.”
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`OTHER RELEVANT ENTITIES
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`18. MorphoSys is a German corporation, with its principal executive offices located at
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`Semmelweisstrasse 7, 82152 Planegg, Germany. It is a commercial-stage biopharmaceutical
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`company dedicated to the discovery, development and commercialization of innovative therapies
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`for people living with cancer and autoimmune diseases. Based on its leading expertise in antibody
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`and protein technologies, MorphoSys is advancing its own pipeline of new drug candidates and
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`has created antibodies which are developed by partners in different areas of unmet medical need.
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`In 2017, Tremfya(R) (guselkumab) - developed by Janssen Research & Development, LLC and
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`marketed by Janssen Biotech, Inc., for the treatment of plaque psoriasis - became the first drug
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`based on MorphoSys’ antibody technology to receive regulatory approval. In July 2020, the U.S.
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`Food and Drug Administration (“FDA”) granted accelerated approval of the company’s
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`proprietary product Monjuvi(R) (tafasitamab-cxix) in combination with lenalidomide in patients
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`with a certain type of lymphoma. The MorphoSys group, including the fully owned U.S.
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`subsidiary MorphoSys US Inc., has more than 600 employees. MorphoSys’ common stock is
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`traded on the Nasdaq Global Select Market under the ticker symbol “MOR.”
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`19.
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`Purchaser is a Delaware corporation and an indirect wholly owned subsidiary of
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`MorphoSys.
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`Company Background
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`SUBSTANTIVE ALLEGATIONS
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`20.
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`Constellation is a clinical-stage biopharmaceutical company using its expertise in
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`epigenetics to discover and develop novel therapeutics that address serious unmet medical needs
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`in patients with cancers associated with abnormal gene expression or drug resistance. The
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`Company’s integrated epigenetics platform enables it to validate targets and generate small
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`molecules impacting these targets to selectively modulate gene expression in tumor and immune
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`cells to drive anti-tumor activity. This platform reflects Constellation’s deep understanding of the
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`biology of regulation of gene expression by epigenetic regulatory proteins, or epigenetic
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`regulators, the development of small-molecule product candidates that selectively modulate their
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`activity, and the design of clinical development programs supported by novel biomarker strategies.
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`Constellation is able to target a broad variety of epigenetic regulators using its platform and have
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`generated development candidates acting against distinct classes of those regulators.
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`21.
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`Constellation has utilized its epigenetics platform to discover and design its wholly
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`owned product candidates, pelabresib (CPI-0610) and CPI-0209. The Company continues to
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`leverage this platform and its clinical experience to develop these product candidates and to
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`discover and develop additional product candidates. Pelabresib inhibits the function of
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`bromodomain and extra terminal domain (“BET”) proteins. CPI-0209 inhibits the enzymatic
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`function of zeste homolog 2 (“EZH2”) protein. In addition to these product candidates, the
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`Company is also exploring CPI-482, which inhibits the function of the lysine-specific demethylase
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`1 (“LSD1”) (aka KDM1A) protein. Constellation is currently conducting clinical trials of these
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`product candidates.
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`22.
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`The Company’s most advanced clinical trial is MANIFEST-2, a global, double-
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`blinded, randomized pivotal Phase 3 clinical study of pelabresib in combination with ruxolitinib
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`(marketed as Jakafi/Jakavi) versus placebo with ruxolitinib in Janus-kinase-1/2 (“JAK”)- inhibitor-
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`naïve patients with myelofibrosis (“MF”). Constellation decided to proceed with this trial based
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`on the preliminary evidence of clinical activity in patients with MF treated with pelabresib in
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`combination with ruxolitinib in MANIFEST, Constellation’s ongoing open-label Phase 2 clinical
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`trial of pelabresib as a monotherapy and in combination with ruxolitinib. The Company believes
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`that preliminary data from MANIFEST suggest that pelabresib has the potential to offer
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`meaningful benefits beyond the current standard of care in MF. In addition, the Company is
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`currently conducting the Phase 1 portion of a Phase 1/2 clinical trial of CPI-0209, Constellation’s
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`second-generation EZH2 inhibitor.
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`23.
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`On May 10, 2021, Constellation announced its first quarter 2020 financial results
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`and business updates, reporting that dosing was underway in the Phase 3 MANIFEST-2 clinical
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`trial for the Company’s product candidate pelabresib. On April 10, 2021, a poster published in
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`association with the American Association for Cancer Research (“AACR”) provided preclinical
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`data suggesting that CPI-0209 has therapeutic potential in androgen receptor-positive prostate
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`cancer. Defendant Raythatha commented on the results, stating:
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`Over the last year, we have advanced the development of pelabresib as a novel
`therapy for myelofibrosis, and we are pleased to be dosing patients in the Phase 3
`MANIFEST-2 trial. Today we are also excited to announce progress on the Phase
`2 development plan for our second generation EZH2 inhibitor, CPI-0209. We have
`determined the recommended Phase 2 dose and the expansion cohorts are open for
`enrollment, with the first patient dosed. We believe that CPI-0209 provides
`potential opportunities to treat a wide range of oncology patients. These are
`important achievements in moving forward with our goal of becoming a fully
`integrated hematology / oncology company with a sustainable product pipeline.
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`The Proposed Transaction
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`24.
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`On June 2, 2021, Constellation and MorphoSys issued a joint press release
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`announcing the Proposed Transaction. The press release stated, in relevant part:
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`Planegg/Munich, Germany and Cambridge, Mass. - June 2, 2021 - MorphoSys AG
`(FSE: MOR; NASDAQ: MOR)
`(“MorphoSys”),
`and Constellation
`Pharmaceuticals, Inc., (NASDAQ: CNST) (“Constellation”) today announced that
`they have entered into a definitive agreement whereby MorphoSys will acquire
`Constellation for $34.00 per share in cash, which represents a total equity value of
`$1.7 billion. The transaction has been unanimously approved by the Management
`Board (Vorstand) and the Supervisory Board (Aufsichtsrat) of MorphoSys, as well
`as the Board of Directors of Constellation and is expected to close in the third
`quarter of 2021.
`
`Constellation is a clinical-stage biopharmaceutical company using its expertise in
`epigenetics to discover and develop novel therapeutics that address serious unmet
`medical needs in patients with various forms of cancer. Constellation’s two lead
`product candidates, pelabresib (CPI-0610), a BET inhibitor, and CPI-0209, a
`second-generation EZH2 inhibitor, are in mid- to late-stage clinical trials and have
`broad therapeutic potential to offer meaningful benefits to patients with various
`hematological and solid tumors. Pelabresib has the potential to be a first- and best-
`in-class BET inhibitor and is currently in a Phase 3 clinical trial for myelofibrosis,
`a bone marrow cancer that disrupts the body’s normal production of blood cells.
`The EZH2 inhibitor CPI-0209 is currently in Phase 2 with best-in-class potential
`for treating hematological and solid tumors. Constellation’s pipeline also includes
`numerous preclinical compounds.
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`“This transformational acquisition represents a major step forward for MorphoSys
`as we bolster our position in hematology-oncology,” said Jean-Paul Kress, M.D.,
`Chief Executive Officer of MorphoSys. “Both pelabresib and CPI-0209 have broad
`potential and we look forward to unlocking their full benefits for cancer patients.
`Our existing clinical and commercial expertise is ideally suited to accelerate
`Constellation’s programs, enabling us to maximize Constellation’s potential and
`bring these novel therapies to market. With Constellation’s high-potential product
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`candidates, complementary R&D capabilities, and outstanding team, we can further
`advance our mission in the fight against cancer.”
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`“We are proud that MorphoSys has recognized the strength of our team, our
`expertise in epigenetics, and our high-potential oncology development pipeline and
`discovery programs,” said Jigar Raythatha, President and Chief Executive Officer
`of Constellation. “Becoming part of MorphoSys creates an industry leader with
`commercial capabilities, a deep R&D pipeline and complementary small molecule
`and biologics discovery and translational capabilities, as well as the financial
`strength to compete to win. Our shareholders will receive attractive, immediate
`and certain cash value for their shares, the employees of the combined entity will
`have a broader platform and greater opportunities, and patients will potentially
`benefit from innovative new therapies that address serious unmet needs.”
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`Strategic Funding Partnership with Royalty Pharma
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`MorphoSys also announced that it has entered into a long-term strategic funding
`partnership with Royalty Pharma plc (Nasdaq: RPRX) (“Royalty Pharma”)
`(together with the Constellation transaction, the “Transactions”). The terms of the
`agreement between MorphoSys and Royalty Pharma provide for the following,
`under certain conditions and upon closing of the transaction with Constellation:
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` •
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` •
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` •
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` •
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` •
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` $1.425 Billion Upfront Payment: Royalty Pharma will make a $1.425 billion
`upfront payment to MorphoSys, supporting its growth strategy. The proceeds
`will be used to support the financing of the Constellation transaction and
`development of the combined pipeline.
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` $350 Million Development Funding Bonds: Royalty Pharma will provide
`MorphoSys with access to up to $350 million in Development Funding Bonds
`with the flexibility to draw over a one-year period.
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` Milestone Payments: Royalty Pharma will make additional payments of up to
`$150 million to MorphoSys upon reaching clinical, regulatory and commercial
`milestones for otilimab, gantenerumab and pelabresib.
`
` Royalties: Royalty Pharma will have the rights to receive 100% of MorphoSys’
`royalties on net sales of Tremfya(R), 80% of future royalties and 100% of future
`milestone payments on otilimab, 60% of future royalties on gantenerumab, and
`3% on future net sales of Constellation’s clinical stage assets (pelabresib and
`CPI-0209).
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` Equity Investment: After completion of the transaction and subject to the
`required approvals of the management board (Vorstand) and the supervisory
`board (Aufsichtsrat) of MorphoSys, Royalty Pharma is expected to invest $100
`million in a cash capital increase of MorphoSys under an authorization to
`exclude subscription rights of existing shareholders. The new MorphoSys
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`shares will be listed on the Frankfurt Stock Exchange.
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`Jean-Paul Kress continued, “We are thrilled to announce this partnership with
`Royalty Pharma, which is providing more than $2 billion to fuel our proprietary
`drug development and commercialization. We are confident they will be a strong
`financial partner for years to come, enabling us to fund our growth and - with the
`addition of Constellation’s innovative pipeline - bring our attractive new candidates
`to patients.”
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`“In acquiring Constellation, MorphoSys has a significant opportunity to drive
`clinical and commercial success,” said Pablo Legorreta, Chief Executive Officer of
`Royalty Pharma. “We are excited to join forces to further advance the combined
`company’s pipeline and positively impact patients.”
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`Benefits of the Transaction
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` •
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` •
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` •
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` •
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` Accelerates Growth Strategy with Exciting Mid- to Late-Stage Product
`Candidates. The transaction accelerates MorphoSys’ strategy to grow through
`proprietary drug development and commercialization. Constellation’s lead
`product candidates, pelabresib and CPI-0209, have broad potential, with
`expected approvals across a range of oncology indications in the coming years.
`Constellation’s lead compounds fit well with MorphoSys’ proven clinical
`development, regulatory and commercial capabilities, and MorphoSys is well
`positioned to rapidly advance and unlock the potential of the Constellation
`portfolio.
`
` Bolsters Position in Hematology-Oncology and Expands into Solid
`Tumors. Constellation adds an attractive, complementary pipeline of highly
`innovative late- to early-stage cancer therapy candidates, augmenting
`MorphoSys’ existing pipeline in hematologic malignances and expanding into
`potential therapies for solid tumors.
`
` Strengthens Cutting-Edge Research and Development Organization. The
`transaction leverages MorphoSys’ expertise in biologics and Constellation’s
`expertise in epigenetics and small molecule discovery platforms to develop a
`broad range of oncology therapies. Constellation adds exciting, pioneering
`science and attractive preclinical compounds targeting epigenetic regulators.
`Together, MorphoSys’ and Constellation’s highly talented research and
`development teams will strengthen earlier stage and emerging science to bring
`exciting new cancer therapies to patients.
`
` Anchored by Strategic Funding Partnership. Royalty Pharma’s strategic
`funding partnership will fuel the expansion of the combined company’s
`capabilities to help accelerate the development, approval and commercial reach
`of breakthrough cancer treatments. This long-term commitment will help
`deliver significant value to all stakeholders.
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`Transaction Details
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`Under the terms of the merger agreement, an indirect wholly-owned subsidiary of
`MorphoSys will promptly commence a tender offer to acquire all of the outstanding
`shares of Constellation’s common stock at a price of $34.00 per share in cash.
`Following successful completion of the tender offer, MorphoSys will acquire all
`remaining shares not tendered in the offer through a second step merger at the same
`price as in the tender offer.
`
`MorphoSys plans to pay an all-cash consideration for the transaction. The tender
`offer is not subject to a financing condition.
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`The purchase price of $34.00 per share in cash represents a premium of
`approximately 70% to Constellation’s volume-weighted average price for the last
`five trading days.
`
`Consummation of the tender offer is subject to various conditions including a
`minimum tender of at least a majority of outstanding Constellation shares, the
`expiration or termination of the waiting period under the Hart-Scott-Rodino
`Antitrust Improvements Act and the receipt of any approvals or clearances required
`to be obtained under the applicable antitrust laws, and other customary conditions.
`The transaction is expected to close in the third quarter of 2021.
`
`Following close, MorphoSys will remain headquartered in Munich, Germany, and
`will maintain a significant commercial and R&D presence
`in Boston,
`Massachusetts.
`
`Advisors
`
`Goldman Sachs Bank Europe SE acted as financial advisor to MorphoSys and
`Skadden, Arps, Slate, Meagher & Flom LLP as its legal advisor. Centerview
`Partners LLC acted as financial advisor to Constellation and Wachtell, Lipton,
`Rosen & Katz as its legal advisor. Goodwin Procter LLP acted as legal advisor to
`Royalty Pharma.
`
`
`Insiders’ Interests in the Proposed Transaction
`
`25.
`
`Constellation insiders are the primary beneficiaries of the Proposed Transaction,
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`not the Company’s public stockholders. The Board and the Company’s executive officers are
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`conflicted because they will have secured unique benefits for themselves from the Proposed
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`Transaction not available to Plaintiff and the public stockholders of Constellation.
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`26.
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`Notably, Company insiders stand to reap substantial financial benefits for securing
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`the deal with MorphoSys. Upon consummation of the Proposed Transaction, all vested and
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`unvested Company options will be converted into the right to receive cash payments.
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`• As of June 15, 2021, (i) the executive officers of the Company held vested
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`Company options relating to 1,337,330 shares in the aggregate, with exercise prices
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`ranging from $5.51 to $11.50 and an aggregate weighted exercise price of $7.90
`
`per share, for which the aggregate amount of cash payments deliverable pursuant
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`to the Merger Agreement if the effective time occurred on June 15, 2021 would be
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`$34,902,069 and (ii) the non-employee directors of the Company held vested
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`Company options relating to 224,090 shares in the aggregate, with exercise prices
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`ranging from $4.08 to $30.29 and an aggregate weighted exercise price of $9.25
`
`per share, for which the aggregate amount of cash payments deliverable pursuant
`
`to the Merger Agreement if the effective time occurred on June 15, 2021 would be
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`$5,546,459.
`
`• As of June 15, 2021, the non-employee directors of the Company held unvested
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`Company options relating to 107,574 shares in the aggregate, with exercise prices
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`ranging from $9.05 to $33.57 and an aggregate weighted exercise price of $30.35
`
`per share, for which the aggregate amount of cash payments deliverable pursuant
`
`to the Merger Agreement if the effective time occurred on June 15, 2021 would be
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`$392,525.
`
`27.
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`Additionally, under the terms of the Merger Agreement, MorphoSys will pay
`
`accelerated annual bonuses to continuing Company employees who remain employed by the
`
`Company upon closing of the merger. The estimated aggregate potential payment to the five
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`executive officers of the Company pursuant to this provision is $1,012,100.
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`28.
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`Further, if they are terminated in connection with the Proposed Transaction,
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`Constellation’s named executive officers stand to receive substantial cash severance payments in
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`the form of golden parachute compensation, as set forth in the following table:
`
`
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`The Recommendation Statement Contains Material Misstatements or Omissions
`
`28.
`
`The defendants filed a materially incomplete and misleading Recommendation
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`Statement with
`
`the SEC and disseminated
`
`it
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`to Constellation’s stockholders.
`
` The
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`Recommendation Statement misrepresents or omits material information that is necessary for the
`
`Company’s stockholders to make an informed decision whether to tender their shares in the Tender
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`Offer or seek appraisal.
`
`29.
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`Specifically, as set forth below, the Recommendation Statement fails to provide
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`Company stockholders with material information or provides them with materially misleading
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`information concerning: (i) Constellation management’s financial projections, relied upon by the
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`Company’s financial advisor Centerview in its financial analyses; (ii) the data and inputs
`
`underlying the financial valuation analyses that support the fairness opinion provided by
`
`Centerview; and (iii) the background of the Proposed Transaction.
`
`Material Omissions Concerning Constellation Management’s Financial Projections
`The Recommendation Statement omits material information regarding Company
`30.
`
`management’s financial projections relied upon by Centerview for its financial analyses.
`
`31.
`
`Specifically, for each of the “Management Projections: Case 1” and “Management
`
`Projections: Case 2,” the Recommendation Statement fails to disclose: (i) the quantification of the
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`risk-adjustments made to the projections; (ii) net operating losses; and (iii) the line items
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`underlying (a) EBIT and (b) unlevered free cash flow.
`
`32.
`
`The omission of this information renders the statements in the “Management
`
`Projections” section of the Recommendation Statement false and/or materially misleading in
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`contravention of the Exchange Act.
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`Material Omissions Concerning Centerview’s Financial Analyses
`
`33.
`
`The Recommendation Statement describes Centerview’s fairness opinion and the
`
`various valuation analyses performed in support of its opinion. However, the description of
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`Centerview’s fairness opinion and analyses fails to include key inputs and assumptions underlying
`
`these analyses. Without this information, as described below, Constellation’s public stockholders
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`are unable to fully understand these analyses and, thus, are unable to determine what weight, if
`
`any, to place on Centerview’s fairness opinion in determining whether to tender their shares in the
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`Tender Offer or seek appraisal.
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`34. With
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`respect
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`to Centerview’s Discounted Cash Flow Analysis,
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`the
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`Recommendation Statement fails to disclose: (i) quantification of the inputs and assumptions
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`underlying the discount rate range of 11.0% to 13.0%; (ii) quantification of the present value of
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`the estimated cost of a $200 million equity raise in 2025 in the “Management Projections: Case 1”
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`and a $350 million equity raise in 2025 in “Management Projections: Case 2”; and (iii) the number
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`of fully-diluted outstanding Company shares utilized in the analysis.
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`35. With respect to Centerview’s Analyst Price Target Analysis, the Recommendation
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`Statement fails to disclose: (i) each of the analyst price targets observed; and (ii) the sources
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`thereof.
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`36.
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`The omission of this information renders the statements in the “Opinion of
`
`13
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`Case 1:21-cv-00946-UNA Document 1 Filed 06/29/21 Page 14 of 19 PageID #: 14
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`Centerview Partners LLC” section of the Recommendation Statement false and/or materially
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`misleading in contravention of the Exchange Act.
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`Material Omissions Concerning the Background of the Proposed Transaction
`The Recommendation Statement fails to disclose material information concerning
`37.
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`the background of the Proposed Transaction.
`
`38.
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`For example, the Company entered into confidentiality agreements with parties
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`referred to in the Recommendation Statement as “Party E” and “Party F.” Yet, the
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`Recommendation Statement fails to disclose whether the confidentiality agreements executed by
`
`these potential counterparties include “don’t-ask, don’t-waive” (“DADW”) standstill provisions
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`that are presently precluding any of these potential counterparties from submitting a topping bid
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`for the Company.
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`39.
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`The failure to disclose the existence of DADW provisions creates the false
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`impression that any of the potential bidders who entered into confidentiality agreements could
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`make a superior proposal for the Company. If those confidentiality agreements contain DADW
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`provisions, then those potential bidders can only make a superior proposal by (i) breaching the
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`confidentiality agreement—as in order to make the superior proposal, they would need to ask for
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`a waiver, either directly or indirectly; or by (ii) being released from the agreement, which if action
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`has been done, is omitted from the Recommendation Statement.
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`40.
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`Any reasonable Constellation stockholder would deem the fact that the most likely
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`topping bidders for the Company may be precluded from making a topping bid for the Company
`
`to significantly alter the total mix of information.
`
`41.
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`The omission of this information renders the statements in the “Background of the
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`Offer and the Merger” section of the Recommendation Statement false and/or materially
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`misleading in contravention of the Exchange Act.
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`14
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`Case 1:21-cv-00946-UNA Document 1 Filed 06/29/21 Page 15 of 19 PageID #: 15
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`42.
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`The Individual Defendants were aware of their duty to disclose the above-
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`referenced omitted information and acted negligently (if not deliberately) in failing to include this
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`information in the Recommendation Statement. Absent disclosure of the foregoing material
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`information prior to the expiration of the Tender Offer, Plaintiff and the other Constellation
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`stockholders will be unable to make an informed decision whether to tender their shares in the
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`Tender Offer or seek appraisal and are thus threatened with irreparable harm warranting the
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`injunctive relief sought herein.
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`CLAIMS FOR RELIEF
`
`COUNT I
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`Claims Against All Defendants for Violations
`of Section 14(d) of the Exchange Act and SEC Rule 14d-9
`
`Plaintiff repeats all previous allegations as if set forth in full.
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`Defendants have caused the Recommendation Statement to be issued with the
`
`29.
`
`30.
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`intention of soliciting Constellation stockholders to tender their shares in the Tender Offer.
`
`31.
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`Section 14(d)(4) of the Exchange Act and SEC Rule 14d-9 promulgated thereunder
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`require full and complete disclosure in connection with tender offers.
`
`32.
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`The Recommendation Statement violates Section 14(d)(4) and Rule 14d-9 because
`
`it omits material facts, including those set forth above, which omission renders the
`
`Recommendation Statement false and/or misleading.
`
`33.
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`Defendants knowingly or with deliberate recklessness omitted the material
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`information identified above from the Recommendation Statement, causing certain statements
`
`therein to be materially incomplete and therefore misleading. Indeed, while defendants
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`undoubtedly had access to and/or reviewed the omitted material information in connection with
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`approving the Proposed Transaction, they allowed it to be omitted from the Recommendation
`
`15
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`Case 1:21-cv-00946-UNA Document 1 Filed 06/29/21 Page 16 of 19 PageID #: 16
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`Statement, rendering certain portions of the Recommendation Statement materially incomplete
`
`and therefore misleading.
`
`34.
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`The misrepresentations and omissions in the Recommendation Statement are
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`material to Plaintiff and the other stockholders of Constellation, who will be deprived of their right
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`to make an informed decision whether to tender their shares or seek appraisal if such
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`misre