As previously disclosed, on November 1, 2022, Benefitfocus, Inc. (the “Company”) entered into an Agreement and Plan of Merger, as amended and restated by the Amended and Restated Agreement and Plan of Merger, dated as of December 19, 2022 (the “Merger Agreement”), by and among the Company, Voya Financial, Inc., a Delaware corporation (“Parent”) and Origami Squirrel Acquisition Corp, a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation in the Merger. On December 19, 2022, in connection with the Merger, the Company filed with the Securities and Exchange Commission (“SEC”) a definitive proxy statement (the “Definitive Proxy Statement”) with respect to the special meeting of the Company’s stockholders (“Special Meeting”) scheduled to be held on January 20, 2023. Additional information about how to attend the Special Meeting is contained in the Definitive Proxy Statement.
Litigation Related to the Merger
As previously disclosed in the Definitive Proxy Statement, one lawsuit had been filed in connection with the Merger between November 1, 2022 and December 16, 2022 against the Company and the directors of the Company (collectively, the “Defendants”). The complaint, Stein v. Benefitfocus, Inc. et al., C.A. No. 1:22-cv-10358-PAE, was filed on December 7, 2022 in the United States District Court for the Southern District of New York.
Following the filing of the Definitive Proxy Statement with the SEC, two additional lawsuits were filed in connection with the Merger against the Defendants. The complaint, Weiss v. Benefitfocus, Inc. et al., C.A. No. 1:22-cv-10719-PAE, was filed on December 20, 2022 in the United States District Court for the Southern District of New York. The complaint, Ballard v. Benefitfocus, Inc. et al., C.A. 1:22-cv-01640-UNA, was filed on December 29, 2022 in the United States District Court for the District of Delaware (Wilmington).
The complaints filed allege that the Defendants disseminated or authorized the dissemination of an incomplete or misleading proxy statement regarding the proposed Merger in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 14a-9 promulgated thereunder, including in respect of the disclosures concerning the Company’s financial projections and the analyses performed by the Company’s financial advisor in support of its fairness opinion. The complaints further allege that the directors of the Company are liable for these violations as “controlling persons” of the Company under Section 20(a) of the Exchange Act.
The complaints seek injunctive relief, including enjoining the Merger unless and until the Defendants disclose the allegedly omitted material information and rescinding the Merger in the event the Company consummates the Merger (or awarding rescissory damages). The complaints also seek, among other relief, damages and an award of attorneys’ and experts’ fees. The Company also has received seven letters on behalf of purported stockholders of the Company raising similar allegations and demanding the disclosure of certain additional information.
The Company believes that the claims and allegations in the complaints and stockholder letters are without merit and that no further disclosure is required under applicable law. However, in order to avoid the risk of the claims delaying or adversely affecting the Merger and to minimize the costs, risks, and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, the Company has determined to voluntarily supplement the Definitive Proxy Statement as described in this Current Report on Form 8-K. Nothing in this Current Report on Form 8-K shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the disclosures set forth herein. To the contrary, the Company specifically denies all allegations in the complaints and letters and any assertion that additional disclosure was or is required.
Supplemental Disclosures to Definitive Proxy Statement
This supplemental information to the Definitive Proxy Statement should be read in conjunction with the Definitive Proxy Statement, which should be read in its entirety. Nothing herein shall be deemed an admission of the legal necessity or materiality of any of the disclosures set forth herein. All page references in the information below are to pages in the Definitive Proxy Statement, and all terms used but not defined below shall have the meanings set forth in the Definitive Proxy Statement. Except as specifically noted herein, the information set forth in the Definitive Proxy Statement remains unchanged.
The following underlined language is added to footnote 2 to the table following the last full paragraph of the Definitive Proxy Statement entitled “The Merger Proposal—Financial Forecasts and Financial Projections” that appears on page 68.
(2) |
“Unlevered Free Cash Flow” means Adjusted EBITDA less stock-based compensation, less capital expenditures, changes in net working capital and taxes. Unlevered Free Cash Flow from Q4 2022E to 2026E assumes no income taxes paid as a result of the utilization of the Company’s net operating losses. Unlevered Free Cash Flow was not presented in Alternative Case 2. |