On April 14, 2021, Shiva Stein (“Plaintiff”) represented by Justin Aaron Kuehn of Moore Kuehn, PLLC filed a civil action against Extended Stay, Inc., (“Extended Stay”), its controlled subsidiary REIT, ESH Hospitality, Inc. (“ESH” and along with Extended Stay, the “Company”), and the members Extended Stay’s and ESH’s board of directors (the “Board” or the “Individual Defendants” and collectively with the Company, the “Defendants”) seeking injunctive relief and damages resulting from the Defendants’ alleged violations of the Exchange Act. This case was filed in the US District Courts in the Southern District of New York with Judge Andrew L. Carter, Jr presiding.
In the complaint, Plaintiff has alleged that “Defendants have violated the Exchange Act by causing a materially incomplete and misleading Proxy Statement on Schedule 14A (the “Proxy Statement”) to be filed on April 13, 2021 with the United States Securities and Exchange Commission (“SEC”) and disseminated to Company stockholders. The Proxy Statement recommends that Company stockholders vote in favor of a proposed transaction whereby Eagle Merger Sub 1 Corporation (“MergerCo 1”), an acquisition subsidiary of Parent, will merge with and into Extended Stay and Eagle Merger Sub 2 Corporation (“MergerCo2”), an indirect acquisition subsidiary of Parent, will merge with and into ESH with Extended Stay and ESH continuing as surviving entities (the “Proposed Transaction”).”
The Plaintiff also alleged that “Pursuant to the terms of the definitive agreement and plan of merger the companies entered into (the “Merger Agreement”), each Extended Stay stockholder will receive $19.50 in cash per each paired share owned (the “Merger Consideration”). However, under the terms of the Merger Agreement, the Buyout Group may request that the Company pay a special distribution immediately prior to the closing of the Proposed Transaction of up to $1.75 per paired share, and in that case, the Merger Consideration would be decreased by that dividend amount.”
The Plaintiff has further alleged that “The Proxy Statement fails to provide material information concerning financial projections by prepared management and given to and relied upon by Goldman Sachs in its analyses. It discloses management-prepared financial projections for the Company which are materially misleading and indicates that in connection with the rendering of the fairness opinions, that the management of the Company prepared certain non-public financial forecasts (the “Company Projections”) and provided them to the Board and Goldman Sachs with forming a view about stand-alone valuations.”
There are two claims for relief laid down by the Plaintiff. The first claim is for the alleged violations of Section 14(a) of the Exchange Act and Rule 14a-9 and 17 C.F.R. § 244.100 by all Defendants. The alleged misrepresentations and omissions in the Proxy Statement are material to Plaintiff, who will be deprived of her right to cast an informed vote if such alleged misrepresentations and omissions are not corrected prior to the vote on the Proposed Transaction. The second claim for relief is for the alleged violations of Section 20(a) of the Exchange Act by individual defendants. The Individual Defendants had the ability to exercise control over and did control a person or persons who have each allegedly violated Section 14(a) and Rule 14a-9, by their acts and omissions as alleged herein. By virtue of their positions as controlling persons, these defendants are allegedly liable pursuant to Section 20(a) of the Exchange Act.
In the Prayer for relief, the Plaintiff has prayed for injunctive relief, rescindment of Merger Agreement and other compensatory damages, costs and any other relief as the court may deem just and proper.
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Pending - Other Pending
U.S. District Courts
New York Southern District
Andrew L. Carter, Jr
Kapila K. Anand
Thomas F. O' Toole
Bruce N. Haase
The Blackstone Group, Inc.
ESH Hospitality, Inc.
Richard F. Wallman
Douglas G. Geoga
Extended Stay America, Inc.
Eagle Parent Holdings L.P.
Jodie W. McLean
Starwood Capital Group
Gloria Kui Melwani
1180 Avenue Of The Americas, 8Th Floor
New York, NY 10036
(#2) CIVIL COVER SHEET filed..(Melwani, Gloria) (Entered: 04/14/2021)
(#1) COMPLAINT against Kapila K. Anand, Neil Brown, ESH Hospitality, Inc., Eagle Parent Holdings L.P., Extended Stay America, Inc., Douglas G. Geoga, Bruce N. Haase, Steven Kent, Ellen Keszler, Jodie W. McLean, Thomas F. O' Toole, Lisa Palmer, Starwood Capital Group, The Blackstone Group, Inc., Simon Turner, Richard F. Wallman. (Filing Fee $ 402.00, Receipt Number ANYSDC-24399796)Document filed by Shiva Stein..(Melwani, Gloria) (Entered: 04/14/2021)
DocketCase Designated ECF. (pc) (Entered: 04/15/2021)Read MoreRead Less
DocketMagistrate Judge Robert W. Lehrburger is so designated. Pursuant to 28 U.S.C. Section 636(c) and Fed. R. Civ. P. 73(b)(1) parties are notified that they may consent to proceed before a United States Magistrate Judge. Parties who wish to consent may access the necessary form at the following link: #https://nysd.uscourts.gov/sites/default/files/2018-06/AO-3.pdf. (pc) (Entered: 04/15/2021)Read MoreRead Less
DocketCASE OPENING INITIAL ASSIGNMENT NOTICE: The above-entitled action is assigned to Judge Andrew L. Carter, Jr. Please download and review the Individual Practices of the assigned District Judge, located at #https://nysd.uscourts.gov/judges/district-judges. Attorneys are responsible for providing courtesy copies to judges where their Individual Practices require such. Please download and review the ECF Rules and Instructions, located at #https://nysd.uscourts.gov/rules/ecf-related-instructions..(pc) (Entered: 04/15/2021)Read MoreRead Less
Docket(#2) CIVIL COVER SHEET filed..(Melwani, Gloria) (Entered: 04/14/2021)Read MoreRead Less
Docket(#1) COMPLAINT against Kapila K. Anand, Neil Brown, ESH Hospitality, Inc., Eagle Parent Holdings L.P., Extended Stay America, Inc., Douglas G. Geoga, Bruce N. Haase, Steven Kent, Ellen Keszler, Jodie W. McLean, Thomas F. O' Toole, Lisa Palmer, Starwood Capital Group, The Blackstone Group, Inc., Simon Turner, Richard F. Wallman. (Filing Fee $ 402.00, Receipt Number ANYSDC-24399796)Document filed by Shiva Stein..(Melwani, Gloria) (Entered: 04/14/2021)Read MoreRead Less
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