SANTA ANA–Semiconductor maker Broadcom Corp. has settled a stockholder class-action lawsuit that originated after the company merged with Avago in 2015.
Joshua S. Devore, a partner in the Washington,
D.C.-based law firm Cohen Milstein Sellers and Toll said the settlement provides
for a series of representations to be made by Broadcom Limited and filed
with the SEC.
“We will ask that the court award attorneys' fees and
reimbursement of expenses that will be paid by defendants,” Devore told the Northern California Record.
A hearing is scheduled for 1:30 p.m. on Feb. 27 in the U.S.
District Court for the Central District of California before Judge James Selna.
“At that time, the court will approve the settlement, and
rule on a request for legal fees and expenses,” Devore said. “It consists of two pieces: supplemental
disclosures that have already been made and a second set of representations
that the new company will make.”
Devore noted that the case has been winding its way through
court since the merger in 2015. On Nov. 16, 2015, the court appointed the Iron
Workers Fund and Oklahoma Firefighters as lead plaintiffs in the action.
Terms of the merger agreement called for Avago to pay $37
billion for all of Broadcom’s common stock.
“Under the merger agreement, shareholders could elect to
receive either a combination of cash and ordinary shares in the newly formed
company or a restricted equity security,” Devore said. “The equity security would not be
transferable or saleable for a period of one to two years after closing.”
Devore noted that the cash and ordinary share consideration
is subject to proration such that shareholders, regardless of what they elect,
will likely receive approximately 54 percent cash and 46 percent ordinary
In 2016, Cohen Milstein Sellers and Toll was appointed lead
counsel by Selna on behalf of the Iron Workers Mid-America Pension Plan and
Oklahoma Firefighters Pension and Retirement System, and the proposed class of
Broadcom shareholders who were challenging the merger.
“The class-action complaint alleged that the joint proxy
statement issued by the merging companies was false and misleading, and omitted
material information,” Devore said. “It also noted that Broadcom’s board
of directors breached their fiduciary duties to shareholders.”
Some board members were alleged to have aided in the breach,
according to filings with the court.
Broadcom’s stock transfer agent, Computershare Shareholder
Services, provided Kurtzman Carson Consultants LLC (KCC) with a list of 828
unique names and addresses of record holders during the class period.
According to Devore, KCC was appointed by the court to serve
as settlement administrator in connection with the proposed settlement.
“In December, KCC mailed copies of the postcard summary notice
to each of the 828 record holders,” Devore noted.
In total, the notice was initially sent to 1,917 potential
As of Jan. 20, 2017, Devote noted that KCC has received
109,793 names and addresses of potential class members (after duplicate
mailing records were removed) from individuals, brokers, dealers, banks and
other nominees requesting notices to be mailed to such persons.
Also, KCC has received requests from brokers and other
nominees for 113,017 postcard summary notices to be sent to such brokers and
nominees so that they could forward them to their customers. All such requests
were promptly fulfilled.
Devore noted that as of Jan. 20, KCC has mailed 224,823 postcard summary notices. KCC
has not received any options from the settlement class.
Cohen Milstein Sellers and Toll was assisted in the case by
Wolf Haldenstein Adler Freeman & Herz LLP, a national law firm with offices
in San Diego, New York and Chicago; WeissLaw, a firm with offices in New
York and California; and Westerman Law Corp., based in Los Angeles.