Investors leveled the suits in the U.S. District Court for Delaware earlier this month seeking to block the deal. The purported class-action suits argued that K2M and its management failed to disclose financial projections made by its advisor, Piper Jaffray, including the calculations for adjusted EBITDA, free cash flow and the reconciliation of reported metrics to adjusted metrics. One plaintiff also asked the Delaware court to expedite the case and grant a preliminary injunction barring consummation of the deal.
But yesterday K2M filed updated financials with the Securities & Exchange Commission, detailing the math behind its figures for adjusted EBITDA, free cash flow and reconciliations, even though it “believes that the actions are without merit and that no further disclosure is required.”
The augmented disclosures prompted both sets of plaintiffs to dismiss their suits, including the withdrawal of the injunction, Leesburg, Va.-based K2M said, adding that it released the extra numbers to “eliminate the burden, expense, and uncertainties inherent in such litigation.”
“The defendants have vigorously denied, and continue vigorously to deny, that they have committed any violation of law or engaged in any of the wrongful acts that were alleged in the [lawsuits],” the company said in the filing.
Stryker filed Oct. 18 to extend the anti-trust deadline on the acquisition, to give the U.S. Federal Trade Commission more time to examine the deal, pushing the anti-monopoly waiting period out to Nov. 16. A shareholder vote on the buyout is slated for Nov. 7.
The deal calls for Kalamazoo, Mich.-based Stryker to pay $27.50 per share for each outstanding share of K2M, for a 27% premium over K2M’s average closing price during the 90 days of trading ended August 29. It’s slated to close during the fourth quarter.