ADVO left us
with no choice. The pertinent information we received was
erroneous, projections were grossly inaccurate and we believe we
were the victims of fraud.
Alan F. Schultz, Valassis Chairman, President and CEO
Valassis Communications, Inc. has
filed suit against ADVO, Inc. in Delaware Court to rescind its
$1.3 billion merger agreement with ADVO. ADVO stock is down over
$9 per share (25%) on the news. Vallassis announced the
merger just weeks ago (see
story) and received regulatory approval on August 16th.
According to Valassis, "ADVO management materially
misrepresented the financial health of the company and failed to
reveal internal control deficiencies."
According to the complaint, ADVO intentionally provided Valassis
with "materially false financial information" and "withheld
material information" at a time when the operating income was
materially off forecast. The complaint also alleges that ADVO
executives knew of, but did not disclose, significant internal
control deficiencies associated with ADVO's enterprise- wide
ADVO officials responded, "ADVO can only surmise that Valassis’
action is merely a smokescreen to hide the fact that Valassis is
suffering from an extreme case of buyer’s remorse."
"We believe that taking this action is in the best interest of
our shareholders," said Alan F. Schultz, Valassis Chairman,
President and CEO. "ADVO left us with no choice. The pertinent
information we received was erroneous, projections were grossly
inaccurate and we believe we were the victims of fraud."
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