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MModal Inc., a maker of medical- transcription software, agreed to make more disclosures about a $1.1 billion buyout offer by a unit of JPMorgan Chase & Co. (JPM) to settle investor lawsuits over the acquisition, according to court filings.
MModal agreed to disclose more information about projections used by the company’s financial advisers in evaluating the fairness of the $14-a-share offer from JPMorgan’s One Equity Partners to resolve the suits, Delaware Chancery Court filings show. One Equity executives also agreed to extend the tender deadline for MModal shares by one day to Aug. 14 as part of the accord.
MModal shareholders and the companies were able to reach an agreement that resolves “all claims relating to the merger agreement,” according to an Aug. 8 filing. The accord still needs a judge’s approval.
One Equity Partners, New York-based JPMorgan’s private investment arm, agreed July 3 to pay the $14 a share in cash for MModal, which amounted to an 8.3 percent premium for shares of the maker of medical document-processing technology, MModal officials said last month.
MModal investors argued in court filings last month the company’s directors wrongfully rejected a $17-a-share offer from Nuance Communications Inc. (NUAN), its primary competitor. Burlington, Massachusetts-based Nuance makes speech-recognition software.
David Levy, a spokesman for MModal, and Tasha Pelio, a spokeswoman for One Equity, declined to comment on the settlement today.
One Equity manages about $11 billion of assets and has invested about $9 billion since 2001 buying more than 60 companies across the chemicals, health care, technology, travel and manufacturing industries, according to its website.
MModal has 12,000 employees in five countries, and more than 140 patents and licenses for speech recognition and understanding technology, according to its website.
The company’s directors “breached their fiduciary duties to MModal’s public shareholders by engaging in a flawed sales process,” lawyers for unhappy MModal investors said in a July 24 court filing.
MModal shareholders who sued over the deal argued the company wrongfully withheld cash-flow projections used by Macquarie Group Ltd., a bank hired to evaluate the fairness of One Equity’s offer.
Under the settlement, MModal filed disclosures with the U.S. Securities and Exchange Commission showing officials of Macquarie, Australia’s biggest investment bank, used projections about the software maker’s “unlevered free cash flow” through 2016 to scrutinize One Equity’s offer, according to court filings.
The case is In re MModal Inc. (MODL) Shareholder Litigation, CA7675, Delaware Chancery Court (Wilmington).
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