A lawsuit that was filed in Minnesota on April 10 alleges that the CEO of Life Time Fitness is working with a consortium to purchase the company that he owns. The business litigation involves allegations that the CEO of Life Time Fitness has a conflict of interest by owning shares in both Life Time Fitness and the consortium that is interested in purchasing the company.
The purchase of Life Time Fitness by a consortium led by Leonard Green & Partners LP was announced in March. According to the lawsuit, Life Time Fitness agreed to be sold for approximately $72.10 per share, which is only 7 percent above the price that the company was trading at around the time that the sale was announced. The plaintiff says that shareholders in Life Time Fitness have not been provided with enough information about the sale to allow them to make an informed vote.
With 6.25 percent of the company’s shares, the CEO of Life Time Fitness is the largest investor in the company. At the same time, the lawsuit states that he is a material investor in the consortium that has agreed to purchase Life Time Fitness. By representing Life Time Fitness shareholders and negotiating his equity investment and future employment with the consortium, the CEO was allegedly working on both sides of the purchase agreement.
The sale of a publicly traded company can often give rise to transaction disputes between shareholders. The owner of a company that is being sold might want to work with a business and commercial law attorney to ensure that the sale goes smoothly and involves minimal business litigation.
Source: Legal Newsline, “Lawsuit alleges conflict of interest in Life Time Fitness CEO’s suitor role,” April 22, 2015
This information is general in nature and should not be construed as tax or legal advice.