SPAC investor sues over allegedly conflicted XL Fleet deal
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- Lawsuit follows Pivotal Investment Corp II’s 2020 union with XL Fleet
- Investor sued XL Fleet for records to investigate deal in May
- Investor claims deal was conflicted, process flawed
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(Reuters) – A Pivotal Investment Corp. II investor has sued the blank-check company’s board in a Delaware over its completed $1 billion merger with commercial truck-focused electric vehicle technology company XL Fleet Corp.
Investor Cody Laidlaw, represented by Grant & Eisenhofer, filed a proposed class action in the Delaware Chancery Court on Monday accusing the special purpose acquisition company’s leaders of perpetuating a “disturbing trend” among SPACs by completing an allegedly conflicted deal.
“The Pivotal transaction failed to observe the most basic principle of Delaware corporate governance: namely, that a corporation’s governance structure should be designed to protect and promote the interests of public stockholders, not the financial interests of its insiders and controllers,” Laidlaw said.
Laidlaw filed the suit more than four months after suing XL Fleet for access to the company’s books and records to investigate potential wrongdoing in completing the merger.
In August, XL Fleet also moved to dismiss a proposed class action it’s facing in a Manhattan federal court for allegedly failing to disclose to investors that the company had inflated its reported sales and overstated its technology and ability to meet new product timelines.
Laidlaw’s attorney Michael Barry of Grant & Eisenhofer did not respond to a request for comment on Monday. Neither did representatives for Pivotal Investment Corp or XL Fleet.
John Sylvia and Matthew Levitt of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, who are representing XL Fleet and some of Pivotal’s directors in the other suits, also did not respond to requests for comment.
SPACs or blank-check firms raise funds through initial public offerings to merge with privately held companies and take them public.
Pivotal Investment Corporation II completed its merger with Legacy XL in December 2020, according to a press release. The combined company was renamed XL Fleet and was valued at $1 billion.
In Monday’s complaint, Laidlaw claimed that the Pivotal SPAC’s “conflicted” board failed to disclose that XL Fleet’s alleged weaknesses inflated its value. The investor also said that XL Fleet was unable to produce any documents proving that the SPAC’s board conducted any due diligence review of the business.
The case is Laidlaw v. Ledecky, Delaware Court of Chancery, No. 2021-0808.
For Laidlaw: Michael Barry of Grant & Eisenhofer
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