By: Jennifer Saba ADVO said Friday that it is suing Valassis in order to enforce the $1.3 billion deal announced earlier this summer. On Aug. 30, Valassis sued ADVO claiming fraud and deception.
ADVO filed a counterclaim in the Court of Chancery for New Castle County, Delaware stating that Valassis has no ?right to rescind or terminate? its obligation to purchase the direct mail company.
Among other things, ADVO is seeking an order that Valassis pay interest from Sept. 15, 2006 on the $37 per share merger consideration due to ADVO stockholders.
ADVO is going forward with a special shareholder meeting to vote for the deal on Sept. 13. If stockholders approve the deal, Valassis has to honor the merger agreement within two days, alleges ADVO.
ADVO is posting a redacted version of its counterclaim ?to protect non-public, competitively sensitive information regarding ADVO?s business" later today.
Both ADVO and Valassis have been firing off press releases like the form is going out of style.
On Thursday, Valassis sent out a statement with the headline ?When Will We Learn the Truth?? in response to an ADVO release challenging the veractiy of Valassis' claims.
?This is not about Valassis wanting to litigate in the press instead of the courtroom ... It is about learning the truth,? said a Valassis statement.
Valassis then takes ADVO to task for refusing to ?unseal? Valassis' complaint.
Merrill Lynch analyst Lauren Rich Fine asks her own questions in a note released Friday: ?As someone who has been in the business a long time, it is rare to see something really new and novel; the press release exchange between ADVO and Valassis qualifies as one of these. While [Valassis] keeps asking what ADVO has to hide, we wonder what advice [Valassis] is getting and why the press releases are making it out the door.?
Merrill Lynch thinks that, despite the drama, the deal will probably get done.
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