New York Knicks executive chairman James Dolan watches during the first quarter against the Orlando Magic at Madison Square Garden. Brad Penner-USA TODAY Sports(Reuters) – Madison Square Garden Entertainment shareholders have accused the companys board of utterly failing to protect the company and shareholders’ interests by completing the merger with MSG Networks Inc.
Two MSG Entertainment shareholders, led by the City of Miramar Retirement Plan and Trust Fund for General Employees, alleged in a complaint made public on Monday that the Dolan family, which controls the majority of the companys board, pushed for the transaction to increase their ownership of MSG Entertainment and fund other projects.
“The Dolans largest new undertaking is the Sphere project, located in Las Vegas, with another venue to follow, the shareholders said. In part to fund the Sphere project, the Dolans engineered the Merger with MSGN, overpaying for MSGN and diluting MSGEs public stockholders while enhancing the Dolans own economic and voting stake.
The lawsuit, filed in Delaware Chancery Court, comes just over a month after Chancellor Kathaleen McCormick in Wilmington rejected other shareholders bids to block the vote to approve the deal.
One of attorneys for the shareholders in Monday’s suit, Joel Fleming of Block & Leviton, declined to comment on Wednesday.
The attorneys that represented MSG Entertainment, MSG Networks and Dolan in the prior action did not immediately respond to requests for comment on Wednesday. Neither did representatives for MSG Entertainment and MSG Networks.
MSG Entertainment hosts events at venues including New Yorks Madison Square Garden and Radio City Music Hall, while MSG Network owns and operates sport and entertainment television networks and a streaming service for the New York area.
Both companies’ boards include members of the Dolan family, and the family controls a supermajority of the voting power for both companies, according to the complaint.
The companies officially announced in March that they had agreed to merge through an all-stock transaction, according to a press release. The deal closed last month.
The Florida-based pension funds claimed in their heavily-redacted complaint that the MSG Entertainments stock price fell nearly $10 per share after the deal was announced.
The shareholders said that the transaction was completed through an unfair process and at an unfair price that took advantage of the COVID-19 pandemics negative impact on MSG Entertainments business.
The special committee created to review the transaction was prevented from considering alternative merger partners, the shareholders said. They also alleged that financial advisers and some of the law firms that helped craft the deal had conflicts of interest, according to the complaint.
The case is City of Miramar Retirement Plan and Trust Fund for General Employees et al. v. Charles F. Dolan et al, Delaware Court of Chancery, No. 2021-0692.
For the shareholders: Jason Leviton and Joel Fleming of Block & Leviton
Counsel information for the Dolan family and the other MSG Entertainment directors was not immediately known.
Read more:
MSG merger vote gets greenlight from Delaware Chancery Court judgeread more
MSGE shareholders sue board, execs in Delaware over MSG Networks union – Reuters
