SAN FRANCISCO — A medical doctor and an investor in the New Relic web analytics and tracking software company has filed suit in San Francisco court to challenge the sale of the company, saying owners and directors shorted investors in the $6.5 billion deal.
Susan D. Arthur, Phalachandra Bhat, Lewis Cirne, Hope Cochran, Ann Selsanto, Kevin Galligan, David Henshall, Radhakrishnan Mahendran, Takeshi Numoto, William Staples, New Relic, Francisco Partners Management and TPG Global were all named as defendants in the suit.
Dr. Jeffrey R. Schantz claims when New Relic was sold to Francisco Partners earlier this year, the sale violated California law, according to a complaint filed Oct. 3 in San Francisco County Superior Court.
Schantz claims the sale violates California Corporations Code § 25401 and California common law for its negligent misrepresentation and concealment and negligence
"The Sale is unfair to Plaintiff and New Relic’s other public investors because (a) the price being paid to New Relic’s investors pursuant to the Sale is inadequate and (b) the process leading to the Sale was flawed and was tainted by the personal interests and motivations of the Individual Defendants and the financial advisor they hired to advise the Company on the Sale – Qatalyst Partners LP," the complaint states.
Schantz claims public investors are receiving $87 per share, which is much less than the intrinsic value of the company’s stock, which the lawsuit asserts should have been $114.07 per share. He alleges the transaction will deprive public investors of nearly $1.2 billion in value collectively.
Schantz is seeking damages with interest. He is represented by attorney Timothy J. Burke of the Law Office of Timothy J. Burke in San Pedro.
New Relic software was recently sold for $6.5 billion.
San Francisco County Superior Court case number: CGC-23-609495