Foundation Building Materials, Inc. (NYSE: FBM)
According to the Complaint, Foundation Building Materials, Inc. is a specialty building products distributor of wallboard, suspended ceiling systems, metal framing, and complementary and other products throughout North America.
On November 15, 2020, Foundation issued a press release announcing that it had entered into an Agreement and Plan of Merger dated November 14, 2020 (the “Merger Agreement”) to sell Foundation to American Securities. Under the terms of the Merger Agreement, each Foundation stockholder will receive $19.25 in cash for each share of Foundation common stock they own (the “Merger Consideration”). The Proposed Transaction is valued at approximately $1.37 billion.
Concurrently with the execution of the Merger Agreement, in connection with a Tax Receivable Agreement dated as of February 8, 2017 (“TRA”), the Company and its controlling stockholder LSF9 Cypress Parent 2 LLC (“Principal Stockholder”) entered into a TRA Termination Agreement pursuant to which the Company will pay the Principal Stockholder approximately $75.5 million in addition to regular payments made between signing and closing under the terms of the TRA. That same day the Principal Stockholder executed and delivered an irrevocable written consent adopting the Merger Agreement and approving the Proposed Transaction and the TRA Termination Agreement. The Company’s minority stockholders do not have a vote on the Proposed Transaction or the TRA Termination Agreement.
On December 4, 2020, Foundation filed a Schedule 14C Definitive Proxy Statement (the “Proxy Statement”) with the SEC. The Complaint alleges that the Proxy Statement omits or misrepresents material information concerning, among other things: (i) financial projections for Foundation; (ii) the data and inputs underlying the financial valuation analyses that support the fairness opinion provided by the financial advisor to the special committee of the Board; (iii) the background of the Proposed Transaction; and (iv) potential conflicts of interest faced by the Company’s financial advisor and Company insiders.