8-K: Victory Capital Amends Proxy Statement Following Stockholder Lawsuits Over Amundi US Acquisition

Victory Capital has amended its proxy statement regarding the acquisition of Amundi US following stockholder lawsuits alleging insufficient disclosures, while maintaining its recommendation for shareholders to approve the deal.

Summary

• Victory Capital is acquiring Amundi US from Amundi Asset Management in exchange for newly issued shares of Victory common stock and a new series of non-voting convertible preferred stock.
• The share issuance will represent 26.1% of Victory's fully diluted shares after the transaction.
• Victory needs stockholder approval for the share issuance, which is a condition for closing the deal.
• Two lawsuits and five demand letters have been filed by purported Victory stockholders alleging that the proxy statement was materially incomplete and misleading.
• The lawsuits seek to enjoin the transaction, rescind it, or award damages and legal fees.
• Victory believes the allegations are without merit but has made supplemental disclosures to avoid delays and costs.
• The supplemental disclosures include revisions to financial projections and analysis by PJT Partners, Victory's financial advisor.
• The special meeting for stockholders to vote on the share issuance is scheduled for October 11, 2024.
• The board continues to recommend that stockholders vote in favor of the proposals.

Sentiment

Score: 5

Explanation: The sentiment is neutral to slightly negative due to the litigation and need for supplemental disclosures, but the company is taking steps to address the issues and move forward with the acquisition.

Positives

• Victory is taking proactive steps to address stockholder concerns by providing supplemental disclosures.
• The board continues to recommend that stockholders vote in favor of the proposals, indicating confidence in the transaction.
• The company is working to minimize the risk of delays and costs associated with the litigation.

Negatives

• Stockholder lawsuits and demand letters indicate concerns about the completeness and accuracy of the proxy statement.
• The litigation could potentially delay or adversely affect the proposed acquisition.
• The company is incurring additional costs to address the litigation and provide supplemental disclosures.

Risks

• The proposed acquisition may not close if the conditions are not met, including stockholder approval.
• The litigation could result in an injunction, rescission of the transaction, or damages.
• There are risks associated with achieving the expected benefits and synergies from the acquisition.
• The company faces risks related to its future business and financial performance.

Future Outlook

The document includes forward-looking statements regarding the proposed Contribution and the outlook for Victory Capital's and Amundi's future business and financial performance, which are subject to various risks and uncertainties.

Management Comments

• Victory believes that the allegations contained in the Litigation Matters are without merit.
• Victory specifically denies all allegations in the Litigation Matters and that any additional disclosure was or is required.
• The Board continues to recommend that Victory stockholders vote FOR the proposals to be voted on at the Special Meeting.

Industry Context

This announcement reflects a trend of consolidation in the asset management industry, where companies seek to expand their capabilities and market reach through acquisitions. The litigation highlights the scrutiny that such deals face from shareholders.

Comparison to Industry Standards

• The document references a selected comparable company analysis, which is a standard practice in financial valuation.
• The analysis includes both traditional asset managers and multi-boutique firms, providing a relevant benchmark for Victory Capital.
• The multiples used, such as P/CY2025E Adj. EPS and TEV/CY2025E Adj. EBITDA, are common metrics in the asset management industry.
• The range of multiples for traditional asset managers was 7.8x to 12.9x for P/CY2025E Adj. EPS and 5.5x to 8.8x for TEV/CY2025E Adj. EBITDA.
• The range of multiples for multi-boutique firms was 6.2x to 8.2x for P/CY2025E Adj. EPS and 6.2x to 7.6x for TEV/CY2025E Adj. EBITDA.

Legal Proceedings

• Two lawsuits have been filed by purported Victory stockholders against Victory and its board of directors.
• Five demand letters have been received from purported Victory stockholders alleging similar insufficiencies in the disclosures.
• The lawsuits allege that the proxy statement was materially incomplete and misleading.
• The plaintiffs seek to enjoin the transaction, rescind it, or award damages and legal fees.

Stakeholder Impact

• Shareholders are impacted by the potential dilution from the share issuance and the risks associated with the litigation.
• Employees of both Victory and Amundi US may be affected by the integration of the two companies.
• Customers of both companies may experience changes in services or products as a result of the acquisition.

Next Steps

• Victory stockholders will vote on the share issuance at a special meeting on October 11, 2024.
• The company will continue to address the litigation and provide any necessary updates.

Key Dates

Keywords

acquisition, proxy statement, stockholder litigation, Amundi US, Victory Capital, share issuance, financial projections, discounted cash flow, PJT Partners, merger