Valassis Communications, Inc. v. ADVO, Inc.
In a settlement that allowed the merger of Analysis Group client ADVO, Inc., and Valassis Communications, Inc., to proceed, the two companies ended litigation stemming from Valassis's attempt to cancel its acquisition of ADVO. Under the settlement agreement, Valassis agreed to acquire all of the outstanding common shares of ADVO stock for $33 per share, or about $1.2 billion.
In July 2006, Valassis, the nation's largest provider of newspaper inserts, agreed to acquire ADVO, the nation's largest direct mail marketer. The following month, Valassis sued in Delaware Chancery Court to rescind the merger, alleging fraud and materially adverse changes. Valassis claimed that ADVO misrepresented the financial health of the company and failed to reveal internal control deficiencies.
Working with law firm Wachtell, Lipton, Rosen & Katz, an Analysis Group team supported the work of our academic affiliate, Roman L. Weil of the University of Chicago Booth School of Business. Professor Weil's analysis demonstrated that the financial results of ADVO's fiscal third and fourth quarters, announced after the signing of the merger agreement, did not reflect that ADVO made material misrepresentations to Valassis nor that a materially adverse change at ADVO had occurred. The Analysis Group team included Principal Kevin Gold.