Madison Square Garden Entertainment’s Board Reaches $85M Settlement – The Hollywood Reporter
, 2023-03-15 19:49:34,
Madison Square Garden Entertainment’s board of directors has agreed to settle an $85 million shareholder lawsuit that accuses it of failing to protect shareholder interests when it merged with MSG Networks.
The deal will be covered by the board’s insurers, according to a securities form filed Wednesday. There was no admission of wrongdoing.
The lawsuit filed in 2021 accused the Dolan family of engineering the merger, “overpaying for MSGN and diluting MSGE’s public shareholders,” to further their own interests and increase their voting stake. Shareholders alleged that the deal was intended to finance, among other projects, the $1.9 billion MSG Sphere project in Las Vegas, which is set to open this year. They also claimed that the deal was consummated at an unfair price because it took advantage of the impact of the pandemic on MSGE’s business, which mainly consists of hosting live events. Three lawsuits were filed in Delaware Chancery court and later consolidated.
The merger was completed in March 2021 in a stock transaction.
The Dolan family controls more than 70 percent of MSGE’s voting power. The company’s board, led by Chief Executive Officer James Dolan, breached their fiduciary duties when they leveraged their control of both companies to complete a merger that sent MSGE shares tumbling nearly $10 a share after their announcement, according to the complaint, which was filed a month after a Delaware judge blocked the efforts of both…
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