CafePress Acquisition Focus of Class Action Lawsuit
Everything seemed to be relatively wrapped up for CafePress. After setting itself up to be acquired by Snapfish, it seemed like it was pretty much the point where the credits start rolling and we assume CafePress lives happily ever after in its new life.
That's not the case just yet, though.
The law firm Levi & Korsinsky LLP announced that it has started an investigation into the fairness of the sale, particularly the valuation of the company's shares. This is the same law firm that brought about a securities fraud lawsuit against InnerWorkings Inc., and it's for pretty much the same reason.
The investigation is focused on whether CafePress' board "breached their fiduciary duties to stockholders by failing to adequately shop the company before agreeing to enter into this transaction," according to Financial Buzz. Snapfish's role in it is also under investigation, particularly whether or not it is underpaying for CafePress shares at $1.48 per share, "thus unlawfully harming CafePress shareholders."
This is all pretty new information, so it's difficult to fully extrapolate a conclusion, but let's use the InnerWorkings Inc. lawsuit as a guide.
In May, the company was the subject of a class action lawsuit that alleged that it had errors in financial statements, which resulted in flawed public statements and misleading materials.
The next month, InnerWorkings postponed its 2018 meeting of shareholders after it stated that it would restate historical financial statements for the fiscal years ended Dec. 31, 2017, 2016 and 2015.
The company also delayed the release of its first quarter 2018 financial results and conference call, and received a noncompliance letter from NASDAQ as a result of that.
Granted, the situations are slightly different. While InnerWorkings was under investigation for allegedly misleading shareholders, CafePress is under investigation for allegedly failing to shop the deal around and not doing enough to get the best deal for shareholders. There haven't been any updates from Levi & Korsinsky on the InnerWorkings lawsuit, so we don't expect a resolution regarding CafePress any time soon.
As always, we'll keep you posted.
Related story: What the Heck Is Going On With CafePress?