Ex-Maker Studios CEO Lawsuit Seeks to Halt Disney Sale
A California judge is asked to enjoin a merger vote, scheduled for next week at the digital media company.
Disney's proposed acquisition of digital video studio Maker Studios isn't going off without a hitch.
In response to the $500 million acquisition announced last month, Maker co-founder and former chief executive Danny Zappin is asking a California judge for a restraining order to delay a vote on the sale.
Zappin is involved in a power struggle for the company after being deposed as chief executive in favor of Ynon Kreiz. Maker argues that the handoff was consensual, but last June, Zappin filed a lawsuit that alleges a conspiracy and a breach of fiduciary duties among the company's board members.
Maker's shareholders are scheduled to vote next Tuesday on whether to approve the Disney deal, which includes performance targets that would raise the valuation up to $950 million and make it Disney's biggest deal since acquiring Lucasfilm.
In an application for a temporary restraining order in advance of an injunction motion, Zappin's attorneys make the case that a judge should delay a vote because notice of the merger agreement is "defective and mispresent(s) and omit(s) material facts necessary for Maker's shareholders to make an informed Merger vote." It's a reasonable assumption that Disney conducted due diligence about Zappin's lawsuit before entering into a merger agreement.
Nevertheless, Zappin wants the vote delayed -- and possibly halted -- because shareholders aren't being given information about the lawsuit. The plaintiff believes that the powers-that-be who are running Maker at the moment "seek to deprive Maker shareholders the right to a return of illegally vested and accelerated shares and a higher Merger consideration."
More specifically, Zappin (and a couple of others with much smaller interest in the company) allege that Maker's top brass "issued stock to one another, accelerated vesting of other stock, and entered into a series of agreements with one another using Maker Studio Inc.'s assets so they could wrest control of Maker's board for Maker's Common Stock shareholders in order to create a liquidity event for themselves."
The Disney merger is now being called that "liquidity event." Here's the TRO application, which was filed under seal on Wednesday and has just gone public.
The Hollywood Reporter has reached out to Maker and will update with any response.