This action stems from the December 18, 2019 Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) providing for a combination (the “Combination”) of Xperi and TiVo Corporation (“TiVo”). Xperi and TiVo will through separate mergers become subsidiaries of XRAY-TWOLF Holdco Corporation.
The Complaint alleges that the Board of Directors (the “Board”) failed to fulfill their fiduciary obligations to Xperi’s stockholders with respect to the Merger Agreement, including whether the impact of the coronavirus pandemic has caused a Material Adverse Effect (“MAE”) and/or Intervening Event (“IE”). The Definitive proxy statement dated April 22, 2020 (the “Proxy”) for the scheduled May 29, 2020 Xperi special meeting to vote on the Merger Agreement, indicates that the Board has not met to discuss the proposed combination since it approved the Merger Agreement on December 18, 2019. As such, allegations further state the Board failed to discuss the effects of the COVID-19 pandemic.
The Complaint also alleges that the Board has therefore breached its duty of loyalty by deliberately failing to fulfill its contractual and fiduciary obligations to assess whether TiVo, in light of the pandemic and its economic fallout, has suffered a MAE under the Merger Agreement that would enable Xperi to terminate the Merger Agreement or whether there has been an IE that would permit the Board to change its recommendation.
Additionally, it is alleged that the Xperi Board did not act in good faith on February 23, 2020 in summarily dismissing a February 21, 2020 all-cash bona fide Acquisition Proposal from Metis Ventures LLC to acquire Xperi for $23.30 in cash and that the Xperi Board has intentionally made materially misleading disclosures and deliberately omitted material information from the Proxy.