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MONTH-IN-BRIEF (May 2020)

M&A Law

New York Supreme Court Finds AT&T Offering Documents Not Misleading

By John Adgent

On May 5, 2020, the Supreme Court of New York (the “Court”) dismissed a securities class action suit on behalf of former shareholders of Time Warner Inc., a media and entertainment company (“Time Warner”), alleging several violations of the Securities Act of 1933 (the “Securities Act”) by AT&T, Inc., a communications holding company (“AT&T”), in connection with its June 2018 acquisition of Time Warner (the “Acquisition”).

To facilitate the Acquisition, AT&T issued approximately 1.185 billion shares of common stock to the former shareholders of Time Warner under a registration statement, which became effective on January 6, 2017 (the “Registration Statement”). Additionally, AT&T filed a prospectus on January 9, 2017, for the shares issued and exchanged in the Acquisition (the “Prospectus,” and together with the Registration Statement, the “Offering Documents”). The plaintiff alleged that the defendants made material misstatements regarding the Direct TV Now (“DTVN”) portion of its business in the Offering Documents and communications leading up to the Acquisition in violation of Sections 11, 12(a)(2) and 15 of the Securities Act. Specifically, the defendants allegedly misrepresented the DTVN business as an important source of strength that had added around 1.5 million subscribers when, in reality, DTVN had serious problems that directly undermined the positive representations made by AT&T.

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