BOSTON, Oct. 15, 2015 (GLOBE NEWSWIRE) -- Block & Leviton LLP (www.blockesq.com), a Boston-based law firm representing investors nationwide, has filed a class action lawsuit on behalf of the pension fund for IBEW Local No. 129. The lawsuit claims that the Board of Directors of EMC (“EMC” or the “Company”) (NASDAQ:EMC) breached its fiduciary duties to shareholders with regard to the Company’s proposed sale to Dell Inc. (“Dell”). IBEW Local No. 129 is a significant holder of EMC common stock.
The complaint, filed today in the Business Litigation Session of Massachusetts Superior Court in Boston, alleges that the EMC Board harmed EMC shareholders by agreeing to sell the Company to Dell for $24.05 in cash and 0.111 shares of an impossible-to-value “tracking stock” of VMware Inc. (“VMware”) per share of EMC common stock. VMware is more than 80% owned by EMC, which controls more than 97% of its voting power.
In its press release touting the transaction, EMC disingenuously used an outdated trading price of VMware’s existing stock (NYSE:VMW) to value the “tracking stock” they plan to issue as part of the proposed transaction and thereby artificially inflate the total consideration to be received by EMC shareholders. Because holders of the tracking stock will have significantly fewer rights than VMware’s ordinary shareholders, the stock is expected to trade at a significant discount to VMware’s common stock. Furthermore, shares of VMware have plummeted in value following the merger announcement, falling from $81.78 on October 7, 2015 to $67.97 on October 14, 2015—a loss of almost 17%.
EMC’s proposed transaction with Dell, according to the complaint, is designed to shelter Dell from a multi-billion-dollar tax burden and to reward EMC insiders, while saddling EMC’s shareholders with significant tax liability and insufficient consideration for their shares. The complaint also alleges that EMC’s Board of Directors, led by its Chief Executive Officer, Joseph Tucci, failed to maximize shareholder value by spinning off EMC’s greatest asset, VMware. Instead, Tucci and the EMC Board kept the Company intact largely, as alleged in the complaint, because Tucci will personally receive over $27 million more in compensation through an EMC change-in-control transaction as opposed to if he simply retired or streamlined EMC through strategic spin-offs.
If you are a shareholder in EMC and have questions about your legal rights, have information relevant to the lawsuit or wish to learn more about the litigation, please contact either attorney Jason M. Leviton at (617) 398-5600 or via email at email@example.com, or attorney Steven P. Harte at (617) 398-5600 or via email at firstname.lastname@example.org.
Block & Leviton represents investors for violations of securities laws as well as whistleblowing employees who provide information about their employers’ violations of law throughout the country. The firm’s lawyers have collectively been prosecuting securities cases for over 70 years, have recovered billions of dollars for investors and represent some of the nation’s largest institutional investors.
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Source:Block & Leviton LLP