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In addition to Mark Manner's busy corporate legal practice, he has established himself as a respected and avid astronomer. Read more>

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On December 1, 2016, Parker Hannifin Corporation and CLARCOR Inc. announced that the companies have entered into a definitive agreement under which Parker will acquire CLARCOR for approximately $4.3 billion in cash, including the assumption of net debt. The transaction has been unanimously approved by the board of directors of each company. Upon closing of the transaction, expected to be completed by or during the first quarter of Parker’s fiscal year 2018, CLARCOR will be combined with Parker’s Filtration Group to form a leading and diverse global filtration business. Bass, Berry & Sims has served CLARCOR as primary corporate and securities counsel for 10 years and served as lead counsel on this transaction. Read more here.

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Blueprint for an IPO

Companies go public to raise capital to fuel growth, pay down debt and provide liquidity to shareholders. Although all issuers and offerings are different, the basic process of going public remains relatively constant. Blueprint for an IPO identifies the key players, details the process and identifies the obligations companies will face after going public.

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Chris Lazarini Discusses Burden of Materiality under Section 11 and 12 of Securities Act

Securities Litigation Commentator

Publications

April 18, 2017

Bass, Berry & Sims attorney Chris Lazarini discussed the class action suit brought against Party City alleging the company failed to disclose material facts in SEC documents when it did not discuss the impact the decline in sales of merchandise related to the Disney movie, Frozen had on its overall performance. Plaintiffs sought relief under Sections 11, 12(a)(2), and 15 of the Securities Act. The court disagreed, ruling that the omission would not have misled reasonable investors. 

Chris provided the analysis for Securities Litigation Commentator (SLC). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SLC, please visit the SLC website to sign up for the newsletter.

Jones vs. Party City Holdco, Inc., No. 15-cv-9080 (S.D. N.Y., 2/1/17) 

To state a claim under Section 11 or 12(a)(2) of the Securities Act of 1933, plaintiffs must allege that the registration statement or prospectus contained an untrue statement of material fact. 

This putative stock drop class action against Party City, two beneficial owners of its stock and four securities underwriters, was brought on behalf of all persons who purchased shares in or traceable to Party City's April 2015 initial public offering. Plaintiffs alleged violations of Sections 11, 12(a)(2), and 15 of the Securities Act, focusing on the Company's statement that "none" of its third-party intellectual property licenses were "individually material to our aggregate business." Plaintiffs argued that the company's Registration Statement and Prospectus failed to disclose that the company's 2014 sales were driven in large part by sales of Disney's Frozen merchandise, sales that cooled in 2015. The omission was material, Plaintiffs argued, because the Company later disclosed that sales of its other licensed products could not offset the Frozen "phenomenon." Defendants moved to dismiss, arguing that the statement related to possible risks if the Company lost one of its product licenses and said nothing about future demand or sales.

Both the Section 11 and Section 12 claims require a showing of materiality. Even drawing all reasonable inferences in Plaintiffs' favor, the Court finds that they have not adequately alleged that the alleged misstatement was false or material. Just because the Company later described Frozen's performance as "phenomenal" and "extraordinary," the Court concludes, does not mean that it had a material impact on the Company's aggregate business. When the Registration Statement and Prospectus are viewed as a whole, the Court finds, no reasonable investor could have been misled by the challenged statement, as Plaintiffs alleged no connection between the statement and the Company's business as a whole. Having dismissed the claims related to the primary allegations, the Court also dismisses the Section 15 claims. 

Perhaps the Duke of Weselton was wrong when he said, "I knew there was something dubious going on here."


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