Kaskela Law LLC has filed a stockholder class action complaint on behalf of MultiPlan Corporation (“MultiPlan” or the “Company”) (NYSE: MPLN), formerly known as Churchill Capital Corp. III (“Churchill III”) (NYSE: CCXX), stockholders in the Delaware Court of Chancery (Case No. 2021-0258).
Churchill III was formed in October 2019 as a special purpose acquisition (“SPAC”) vehicle. On July 12, 2020, Churchill III announced that it would combine with privately held MultiPlan, and on October 7, 2020, Churchill/Multiplan stockholders approved the Merger. The post-transaction entity’s stock trades on the New York Stock Exchange under the ticker “MPLN.”
On November 11, 2020, one month after the close of the Merger, Muddy Waters published a report entitled “MultiPlan: Private Equity Necrophilia Meets the Great 2020 Money Grab” (the “Reports”). In the Report, Muddy Waters exposed MultiPlan as a rapidly deteriorating business, highlighting a number of facts that were either entirely omitted or misleadingly characterized in the Proxy and/or other public disclosures concerning the Merger. Among other things, the Report revealed that: (i) MultiPlan was in the process of losing its largest client, UnitedHealthcare, which was estimated to cost Churchill III up to 35% of its revenues and 80% of its levered free cash flow within two years; (ii) MultiPlan was in significant financial decline because of its fundamentally flawed business model, which profited from excessively high healthcare costs; (iii) UnitedHealthcare had purportedly launched a competitor, Naviguard, to reduce its business with MultiPlan and bring the over-priced and conflicted services offered by MultiPlan inhouse; and (iv) MultiPlan had suffered from material, undisclosed pricing pressures that had caused it to slash the “take rate” it charged customers in half in some instances and falsely characterized revenue declines as “idiosyncratic” when in fact they were due to sustained, negative pricing trends afflicting MultiPlan’s business. Following this report, shares of MultiPlan’s stock significant declined in value, to trade below $6.00 per share (as of March 24, 2021).
The Complaint seeks monetary damages arising from the unfair acquisition of MultiPlan and, in the alternative for public stockholders who purchased Company stock prior to the Record Date and continue to hold such stock, equitably reopen the redemption window to allow them to put back their Class A shares for $10 per share, plus interest. As alleged in the Complaint, the Proxy and other public disclosures by Churchill insiders contained material omissions or were materially misleading, such that Class A stockholders were not provided with a fully informed decision whether to redeem their shares ahead of the Merger.
On January 3, 2022, Vice Chancellor Will denied defendants’ motions to dismiss the complaint, paving the way for litigation to proceed. A copy of the Court’s Memorandum Opinion is available at Download.aspx (delaware.gov).