On November 8, 2021, Loyalty Ventures began trading as an independent public company after being spun off from ADS. In the months leading up to the spinoff, Defendants made statements, including in ADS’s SEC filings, touting Loyalty Ventures’ prospects as an independent company, including its “strong” and “highly attractive” profile, and highlighting customers such as Sobeys and its “exclusive relationships.” Similarly, in the months following the spinoff, Defendants assured investors of the quality of Loyalty Ventures’ management team, its business strategy, and its “long-standing customer relationships.”

The Complaint alleges that Defendants misled investors and/or failed to disclose that (1) the Air Miles program suffered from a lack of investment prior to the spinoff; (2) as a result, Sobeys had informed Defendants it was considering exercising its early termination rights; (3) the threat of Sobeys’ departure loomed throughout 2021 including in the timeframe leading up to the spinoff; (4) Defendants expected the departure of any single large sponsor, such as Sobeys, would have “network effect” on the value of the entire Air Miles program; and (5) the high leverage and debt service obligations foisted upon Loyalty Ventures, in conjunction with the “network effect” impact on the value of the Air Miles business, threatened the Company’s ability to continue operations; and (6) as a result, Defendants’ positive statements about the Company’s financial guidance, business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.