Celera is a healthcare business focusing on the integration of genetic testing into routine clinical care through a combination of products and services incorporating proprietary discoveries. The complaint states that on March 18, 2011 Celera announced that it had accepted a buyout offer of $344 million ($8.00 per share) from Quest, whereby Quest would, within a week of the deal's announcement, commence a tender offer to acquire all of the issued and outstanding shares of Celera common stock. This price, according to the complaint, is an inadequate 28% premium to the Company's closing stock price on the day immediately preceding the announcement of the Tender Offer, which premium was quickly vanquished by the market upon news of the Tender Offer. At the same time, the complaint states that the Company shocked the market by filing a host of restatements to its prior Securities and Exchange Commission ("SEC") financial filings ("Restatements"). The complaint alleges that these Restatements expose the fact that Celera's management has engaged in a wide-ranging accounting fraud over the past several years, which included improperly classifying and reporting bad debt expenses and unreimbursed and uncollectible charges.
The complaint alleges that these fraudulent accounting practices materially affected Celera's financial statements. The complaint also alleges that the Restatements are so expansive and damning that had they been disclosed independent of a merger announcement that propped up the stock price, they would have exposed the Company's senior management, as well as the entire Board, to possible liability for violating the federal securities laws. Further, the complaint alleges that as the need for the Restatements became apparent, Kathy Ordonez, Celera's Chief Executive Officer, with the assistance of the rest of the Board, moved quickly to sell the Company at any price in exchange for broad indemnity and continuing employment for Celera's senior management team.
To effectuate a sale in advance of the Restatements, the complaint states that, Ordonez and the Board were forced to accept an offer from the Company's long-time strategic partner, Quest, that was well below what Quest had previously indicated it was prepared to pay for Celera. According to the complaint, Quest had previously offered over $10 a share for Celera, but revised its offer significantly downward in light of defendants' demand for broad indemnification and senior management's request for continued employment post-closing. The complaint alleges that this self-interested negotiating cost Celera shareholders maximum value for their shares, as the Celera Board was eventually forced to accept the $8.00 price if they were to (a) strike a deal in advance of the Restatements; and (b) secure the indemnification and future employment for senior management that they sought.
The complaint alleges that Celera failed to disclose material information in Tender Offer materials filed with the SEC and publicly disseminated in connection with the Tender Offer by Celera on March 28, 2011. According to the complaint, the Tender Offer materials were materially false and misleading because they fail to provide shareholders with adequate disclosure about the sales process, or the financial calculations used to justify the merger price. Specifically, the Tender Offer materials omit and/or misrepresent material information in contravention of Sections 14 and 20 of the 1934 Act and/or defendants' fiduciary duty of disclosure under state law.
