In September, executives of Avantax, the tax-focused wealth administration agency previously referred to as Blucora with some $83 billion in shopper property, introduced they’d promote the agency in an all-cash transaction to Cetera Holdings for $26 a share, or $1.2 billion.
In line with an SEC submitting on Monday, Avantax CEO Chris Walters will step down from his function after the deal closes. Avantax CFO, Treasurer Marc Mehlman and Chief Authorized Officer and Company Secretary Tabitha Bailey will even go away the corporate, in response to the submitting.
“Chris believes that Avantax’s tax-focused method to monetary planning is a successful wealth administration mannequin, and he has full confidence that Avantax will proceed to help its Monetary Professionals in exemplary methods in service of their shoppers,” stated a spokesman for Avantax, in a press release.
In the identical submitting, Avantax stated it’s now going through three lawsuits from shareholders claiming the cope with Cetera might shortchange shareholders, that the proxy assertion given to shareholders to vote for the deal “omitted materials info” and is “false and deceptive,” and that the cope with Cetera needs to be prohibited till the right disclosures had been made. The agency stated it had acquired “a number of” demand letters from shareholders asking for added monetary disclosures earlier than shareholders are requested to vote to approve the deal, and threatening lawsuits of their very own.
The lawsuits declare the proxy assertion filed by Avantax omits or misrepresents details about managements’ conflicts of curiosity, together with post-employment agreements and a few monetary projections for Avantax, in addition to valuation knowledge on which the acquisition value of Avantax was based mostly. The lawsuits declare the corporate failed to reveal the valuation for the corporate based mostly on EBITDA each earlier than and after stock-based compensation was taken into consideration, in addition to the agency’s unlevered free money circulation and sure non-GAAP earnings per share. A earlier submitting revealed Walters might obtain a $21.5 million “golden parachute” as soon as the cope with Cetera closes.
Whereas denying the extra disclosures had been legally required, Avantax filed an amended regulatory assertion that included the knowledge the shareholders required.
“The Firm believes that the claims asserted within the Lawsuits and the Demand Letters are with out benefit,” the Monday SEC submitting stated. “Nevertheless, in an effort to moot the unmeritorious disclosure claims, alleviate the prices, dangers and uncertainties inherent in litigation and supply further info to its stockholders, the Firm has decided to voluntarily complement the Proxy Assertion as described on this Present Report on Type 8-Ok.”
Shareholders are set to vote on the proposed merger settlement on Nov. 21. Avantax stockholders will likely be cashed out at $26 per share. After hitting a excessive of practically $30 per share in mid-February, Avantax inventory has vacillated between $27 and $21 all through 2023.
Focus Monetary Companions confronted the same lawsuit this summer season, previous to finalizing its deal to go personal by way of an acquisition by Clayton, Dubilier & Rice. A shareholder filed a lawsuit in opposition to the corporate, claiming its proxy statements had been deceptive. After Focus filed a complement to the proxy, the shareholder dropped the grievance.