Investor seeks to stop Vail acquisition of Peak Resorts, including Mount Snow
Weeks before shareholders are scheduled to vote on Vail’s $436.6 million acquisition of Peak Resorts, one of Peak’s investors has filed a federal lawsuit against the company.
The lawsuit, filed by investor John Field in Missouri Eastern District Court Aug. 29, alleges Peak violated federal securities laws for providing shareholders a “false and misleading” proxy statement. The lawsuit says the resort omitted or misrepresented financial information and failed to disclose company insiders’ potential conflicts of interest.
Field’s lawsuit demands the shareholder meeting, scheduled for Sept. 20 in Missouri, be enjoined until further information is disclosed.
“In short, unless remedied, Peak Resorts’ public stockholders will be forced to make a voting or appraisal decision on the proposed transaction without full disclosure of all material information,” the lawsuit says.
Peak operates 17 resorts in the U.S., including Mount Snow in Dover.
The lawsuit says Peak’s insiders had a hand in negotiating, reviewing and approving the transaction with Vail Resorts — a violation of the Securities Exchange Act. The plaintiff also says Peak’s nine directors will reap “substantial benefits” from the sale, totaling $2.5 million from converted outstanding restricted stock units. The insiders, who negotiated their benefits, will be “the primary beneficiaries of the proposed transaction, not the company’s public stockholders,” the lawsuit alleges.
The merger needs to be approved by at least two-thirds of shareholders that own outstanding shares of common stock and Series A preferred stock. If approved, shareholders will receive $11 for each share of common stock, according to a Securities and Exchange Commission document.
Most of the voting power lies in a company called Cap 1.
Cap 1 is owned by a trust in which members of the Sackler family are beneficiaries. The Sacklers and their company, Purdue Pharma, are facing numerous lawsuits for manufacturing the painkiller Oxycontin and igniting the drug epidemic.
In 2018, Cap 1 loaned Peak Resorts $50 million to acquire three Pennsylvania resorts, which in turn made Cap 1 the company’s largest outstanding stockholder. Cap 1 currently owns 54% of Peak’s common stock, according to the lawsuit.
The lawsuit also alleges all 40,000 outstanding shares of the company’s Series A preferred stock are owned by Rory Held, one of Peak Resort’s board members, who is also the executive vice president and portfolio manager of Summer Road LLC, an investment management company that provides services to Cap 1, according to SEC documents.
Under an agreement between Held and Summer Road, all of Held’s compensation from the sale will be paid directly to Summer Road as his employer, according to SEC documents.
Peak announced the merger with Vail in July, after reporting in June the company had a “record year.” Peak CEO Timothy Boyd stated part of the success was in part due to the acquisition of the Pennsylvania resorts, according to the lawsuit.
A financial document prepared by Moelis & Company LLC in July concluded the merger was “fair” from a financial perspective to shareholders, but the lawsuit says the proxy statement fails to explain numbers used to make that determination.
The lawsuit also alleges Peak failed to explain how Peak’s leadership team and board members will move forward with the company after the merger.
Peak has yet to file a response to the lawsuit.
Peak Resorts Communications Director Jamie Storrs said Peak’s internal legal team was working on the case, but he declined to comment further.
Attempts to reach Field’s attorney Matthew Dameron of Williams Dirks Dameron LLC in Missouri were unsuccessful.
