June 28, 2022
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QAD to pay $2.45M in legal fees from dispute over acquisition

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Santa Barbara-based QAD announced June 2 it will pay out $2.45 million in legal fees to shareholders who sued to stop the company’s acquisition by Thoma Bravo in 2021.

QAD, which provides cloud software for the manufacturing industry, was purchased last year by the private equity firm Thoma Bravo in a transaction worth $2 billion. The deal was approved by QAD shareholders and closed in November. Thoma Bravo paid QAD shareholders $87.50 per share, which represented a 20% premium over the company’s stock price the day before the deal was announced in June 2021.

Less than a week after the deal was announced, a putative class action complaint was filed in Delaware court by Nantahala Capital Partners II Limited Partnership against QAD, its executives including founder Pamela Lopker, and Thoma Bravo.

The plaintiffs alleged that QAD, Lopker and other executives breached QAD’s certificate of incorporation, that Lopker and other executives breached their respected fiduciary duties and that Thoma Bravo aided and abetted Lopker and other executives of their respective breaches of fiduciary duty. The court eventually denied the plaintiff’s motion for an injunction to stop the acquisition, but it did order QAD to issue a revised proxy statement with additional disclosures before it held a shareholder vote.

According to QAD’s June 2 statement, the company agreed after “extensive negotiations” to pay the $2.45 million to the plaintiff’s attorneys for attorneys’ fees and expenses related to the additional supplemental disclosures. The payment for attorneys’ fees and expenses will not be reviewed by the court, QAD said.