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Law360 (August 26, 2020, 10:03 PM EDT ) A private investor, citing the pandemic, tried to walk back a promise to pay $35 million to support a proposed international financial services merger, the would-be recipient of those funds alleged in a lawsuit filed Wednesday in New York state court.
According to plaintiffs SL Globetrotter LP, the shareholders' representative in the proposed merger, and Global Blue Group Holding AG, the entity that the merger would transform into a public company, defendant Integrated Core Strategies (US) LLC agreed in January to buy 3.5 million shares of the company for $10 each.
But the merger transaction is scheduled to be finalized on Friday, Globetrotter and Global Blue said in the suit —and ICS is trying to get out of its obligation.
"In a bid to justify the repudiation, defendant has set forth a basket of excuses related to the pandemic and other factors," Globetrotter and Global Blue said Wednesday. "But defendant did not secure limitations on its funding obligation for any of these circumstances. Under the plain terms of the agreement, if the transaction closes, as it is expected to do, then defendant is obligated to fund."
Global Blue Group Holding AG's predecessor company Global Blue Group AG, a platform that supports tax-free shopping for merchants and international travelers and provides currency processing services enabling international spending, entered into a merger agreement with special purpose acquisition company Far Point Acquisition Corporation on Jan. 16, the suit claims.
Globetrotter, one of Global Blue's seller parties, and Global Blue allege that to raise money for the deal, they pitched sophisticated investors, including Integrated Core Strategies, on making a private investment in public equity, or PIPE.
"It is common in connection with SPAC agreements — such as the transaction agreement — to offer PIPE opportunities privately to selected sophisticated investors who are looking to secure a meaningful stake in public companies," Globetrotter and Global Blue said Wednesday. "These opportunities are offered in exchange for an upfront commitment by the investor to provide funding at the time a given merger closes."
The plaintiffs said that ICS ultimately agreed to provide the funds, which, according to the agreement, would be registered with ICS' general manager, Millennium Management LLC, an entity with $44 billion in assets under management
But "In a classic case of buyer's remorse induced by COVID-19, defendant no longer desires to make the contracted-for investment and as a result is reneging on its obligations without any justification for doing so," the plaintiffs said Wednesday.
Globetrotter and Global Blue claimed that on Aug. 7, they'd asked ICS for the subscription form ICS had promised to sign, a copy of which they needed to have on hand to close the deal. But they claimed they were stonewalled by the LLC.
They sought confirmation that the defendants breached the agreement, damages, an injunction forcing the company to follow through on its commitment and money to cover the costs of bringing the suit.
Records show that in May, Far Point told the U.S. Securities and Exchange Commission it was telling its shareholders to vote no on the merger because of the pandemic — but the SPAC's shareholders approved the deal Aug. 24.
On Wednesday, attorneys for SL Globetrotter LP and Global Blue Group Holding AG did not immediately respond to a request for comment, and contact information for Integrated Core Strategies US LLC was not immediately available.
The plaintiffs are represented by Jonathan D. Lupkin of Lupkin PLLC and Gerson A. Zweifach, Edward C. Barnidge and Benjamin M. Greenblum of Williams & Connolly LLP.
Counsel information for Integrated Core Strategies US LLC was not immediately available Wednesday.
The case is SL Globetrotter LP et al. v. Integrated Core Strategies US LLC, case number 654057-2020, in the Supreme Court of the State of New York, County of New York.
—Additional reporting by McCord Pagan. Editing by Michael Watanabe.
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