Maker Studios co-founder and ex-CEO Danny Zappin and three other former execs have filed a lawsuit seeking to block a shareholder vote on The Walt Disney Co.’s $500 million-plus acquisition of the YouTube multichannel network operator.
A rep for Maker Studios did not provide comment on the suit. Disney, which announced the deal to buy Maker last month in a deal worth up to $950 million, is not named in the suit; a Disney rep did not respond to a request for comment.
Zappin and the three others — former Maker execs Scott Katz, Derek Jones and Will Watkin — last summer sued Maker Studios, alleging breach of contract and fraud over Zappin’s “ousting” as chief executive. The MCN had previously said the lawsuit is without merit and that the allegations are baseless.
In the new lawsuit, filed Wednesday in the Superior Court for the State of California in Los Angeles, Zappin and the others allege that the deal terms provided by Maker about the Disney transaction to shareholders were “defective and misrepresent and omit material facts necessary for Maker’s shareholders to make an informed merger vote.”
According to the request by Zappin and the three others for a temporary restraining order to block the shareholder vote, Maker did not provide material information about their previous lawsuit.
In that lawsuit, filed in June 2013, they alleged Maker Studios board members and officers “illegally issued shares to themselves and diluted the common stock for their own financial gain to the detriment of other Maker shareholders and take control Makers’ board so that they could ‘rapidly create a “liquidity event”‘ so that they could sell Maker and obtain significant returns on their investments irrespective of the best interests of Maker and to the detriment of Maker and its shareholders.”
The plaintiffs note that they are “in favor of a merger that will benefit all shareholders,” but allege that Maker Studios must provide information about the “illegally vested and accelerated shares” in dispute in the prior lawsuit.
The complaint was filed under seal and a redacted version became public Thursday. The lawsuit names as defendants the same ones as in the previous suit: Maker Studios CEO Ynon Kreiz, Ben Donovan, Lisa Donovan, Mark Suster, Dana Settle, Rachel Lam, Michael DiSanto, GRP Partners, Mida Holdings California, Angulo Investors and Maker Studios itself.
Last May, Maker Studios announced that Kreiz would become executive chairman with Zappin stepping out of the CEO role to become a special adviser to Kreiz. In the June 2013 lawsuit, Zappin and others claimed concealment of secrets, breach of fiduciary duty and constructive fraud. According to that suit, Maker Studio’s new board diluted the common stock in favor of preferred stock, including to regulate the common stock to minority status, for the purpose of electing director seats and “ousting Zappin as Maker CEO.”