james dolan
CreditLuiz C. Ribeiro/New York Daily News/Tribune News Service via Getty Images
madison square garden Entertainment’s board has agreed to settle a shareholder lawsuit for $85 million alleging it failed to protect shareholders during its merger with MSG Networks.
The deal will be underwritten by the board’s insurance company, according to a securities form filed Wednesday. No admission of wrongdoing was made.
The lawsuit, filed in 2021, accuses the Dolan family of orchestrating the merger, “overpaying for MSGN and diluting MSGE’s public shareholders” to advance their own interests and increase their voting power.Shareholders say deal aims to fund $1.9 billion project, among others MSG Sphere Project in Las Vegas, will open this year. They also allege that the deal was done at an unfair price because it took advantage of the impact of the pandemic on MSGE’s business, which largely consists of hosting live events. Three lawsuits were filed in the Delaware Chancery Court and later consolidated.
this merge complete All-stock deal March 2021.
The Dolan family controls more than 70% of MSGE’s voting rights. The indictment alleges that the company’s board, led by Chief Executive Officer James Dolan, used its control of the two companies to complete the merger, causing MSGE’s stock price to drop nearly $10 per share after the announcement, in violation of their terms. fiduciary duty. The filing comes a month after a Delaware judge blocked efforts by investors in both companies to block a vote to approve the deal. In that case, Chancellor of the Exchequer Kathaleen McCormick found that the Dolans did not violate state law that prohibits shareholders holding at least 15 percent of the voting acquisition.
The transaction has been agreed to by both parties and has been documented in the term sheet. Formal settlement provisions have not yet been filed.
“The parties to the litigation have reached an agreement in principle to resolve the litigation on the terms and conditions set forth in a binding term sheet that will be incorporated into a long-term settlement agreement,” the securities filing said. “Among other things, the term sheet provides for the eventual dismissal of the suit in exchange for payment to MSG Entertainment of an $85 million settlement, customary reductions in attorneys’ fees and expenses, in an amount to be determined by the court”
In a statement, a MSGE spokesperson said: “As outlined in the 8-K, this is a settlement involving an $85 million payment from the insurance company to the company, and the Board of Directors agreed to resolve these claims without admitting any liability. “
Joel Fleming, representing shareholders, declined to comment.