Shareholder Sues CMGI Over Flycast, Adsmart Acquisitions
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CMGI (CMGI) has been slapped with a shareholder lawsuit that alleges the company acted in bad faith when it agreed to have one portfolio company, Engage Technologies (ENGA), acquire two others -- Flycast Communications (FCST) and Adsmart Communications.
The holding company disclosed the lawsuit, filed on March 16 in Delaware Chancery Court, in papers filed with the Securities and Exchange Commission in relation to its latest quarterly report.
The suit specifically names companies and their executives -- CMGI, Edward Bennett, Christopher Evans, Craig Goldman, Andrew Hajducky III, Frederic Rosen, Paul Schaut, David Wetherell and Engage Technologies Inc. In the SEC filings, CMGI said that it believes the suit is without merit and that it, "intends to contest the claims vigorously." The companies declined to comment further.
Published reports identified the plaintiff as Doris B. Sollod, a shareholder in Engage who feels that, because that company's stock has soared since the purchase agreement, the buying price (which will be paid in stock) is now too high.
"As a result, (CMGI) will reap wrongful windfall profits on the intended sale of Flycast to Engage, (and) Flycast is not worth $5 billion or anywhere near that sum," Sollod says in the suit, according to Bloomberg News.
The suit reportedly asks a judge to stop the sale and award damages and fees.