By KAREN VELIE
A shareholder filed a class action lawsuit against San Luis Obispo-based software company Mindbody and its board of directors on Thursday for allegedly failing in its fiduciary duty to its stockholders.
The suit alleges the board of directors entered into a deal to sell Mindbody to San Francisco-based Vista Equity Partners for an amount less than the true value of the company for self-benefit. As part of the $1.9 billion sale, shareholders would receive $36.50 for each share.
Less than a year ago, the stock was selling for $43.85 a share. In their latest financial performance release, company executives reported a 37 percent increase in revenue and projected continued growth.
“It appears as though the Board has entered into the Proposed Transaction to procure for themselves and senior management of the Company significant and immediate benefits with little thought to the Company’s public stockholders,” the lawsuit says.
If the company is sold as planned to Vista Equity Partners,12 top executives in the company would receive significant compensation for their holdings. For example, Rick Stollmeyer, co-founder and CEO of Mindbody, would get more than $58 million, Brett White over $11 million and Michael Mansbach over $4.3 million.
Mindbody is a publicly traded company that sells software for managing health and wellness businesses. San Francisco-based Vista Equity Partners, an investment firm focused on software, data and technology-enabled business, has agreed to purchase Mindbody, according to a jointly issued news release.
Mindbody’s board of directors unanimously approved the deal and recommended that stockholders vote their shares in favor of the transaction. The sale was expected to close in the first quarter of 2019, but it is subject to customary closing conditions, including the approval of Mindbody shareholders and United States antitrust approval.
The suit filed by Joseph Schmit, a Mindbody shareholder, asks the court to find the proposed sale “unlawful and unenforceable” and to direct the board to commence a sales process in the best interest of all shareholders.