In re Bemis Co. Sec. Litig.

• Decision Date: 12 January 2021
• Docket Number: 19 Civ. 3356 (JPC)
• Citation: 512 F.Supp.3d 518
• Parties: IN RE: BEMIS CO. SECURITIES LITIGATION
• Court: U.S. District Court — Southern District of New York

512 F.Supp.3d 518

IN RE: BEMIS CO. SECURITIES LITIGATION

19 Civ. 3356 (JPC)

United States District Court, S.D. New York.

Signed January 12, 2021

OPINION AND ORDER

JOHN P. CRONAN, United States District Judge:

Lead Plaintiff Michael Dixon ("Plaintiff") brings this putative class action against Defendants Bemis Company Inc. ("Bemis") and the members of Bemis's Board of Directors (the "Board," collectively with Bemis, "Defendants"), contending that Defendants disseminated a materially false and misleading Definitive Proxy Statement (the "Proxy") in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. §§ 78n(a), 78t(a), and Securities and Exchange Commission ("SEC") Rule 14a-9, 17 C.F.R. § 240.14a-9. Dkt. 14 ("Amended Complaint" or "Am. Compl."). Defendants have moved to dismiss the Amended Complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Dkts. 22, 23 ("Motion to Dismiss"). The Court heard oral argument on the Motion to Dismiss on December 8, 2020. See Dkt. 31 ("12/8/20 Tr."). For the reasons stated below, the Court grants the Motion to Dismiss in full, and dismisses this case with prejudice.

I. Background

The following background is based on allegations contained in the Amended Complaint, which are assumed to be true for the purposes of Defendants’ Rule 12(b)(6) motion to dismiss. See Fin. Guar. Ins. Co. v. Putnam Advisory Co., LLC , 783 F.3d 395, 401 (2d Cir. 2015). The Court also considers at this stage the Proxy, Dkt. 24-1, and the other exhibits attached to Defendants’ motion papers, Dkts. 24-2, 24-3, 24-4, 24-5, which are all filings with the SEC. See Tongue v. Sanofi , 816 F.3d 199, 209 (2d Cir. 2016) ("The court may ... ‘consider any written instrument attached to the complaint, statements or documents incorporated into the complaint by reference, legally required public disclosure documents filed with the SEC, and documents possessed by or known to the plaintiff upon which it relied in bringing the suit.’ ") (quoting ATSI Commc'ns, Inc. v. Shaar Fund, Ltd. , 493 F.3d 87, 98 (2d Cir. 2007) ); Gray v. Wesco Aircraft Holdings, Inc. , 454 F. Supp. 3d 366, 382 (S.D.N.Y. 2020) (explaining why a district court may consider a proxy statement, as a public disclosure document required by law to be filed with the SEC, at the Rule 12(b)(6) stage in an action under Section 14(a) and Rule 14a-9). It is further appropriate for the Court to consider the Proxy at this stage, in light of the extensive references to the Proxy in the Amended Complaint, see Tongue , 816 F.3d at 209 ; Gray , 454 F. Supp. 3d at 382-83, and because Plaintiff does not dispute the accuracy of the description of the events leading to the Transaction as set forth in the Proxy, see Gray , 454 F. Supp. 3d at 383.

A. The Transaction

This case arises out of statements contained in the Proxy, whose purpose was to solicit votes from Bemis shareholders in favor of a merger between Bemis and Amcor Limited ("Amcor"). That merger, which was ultimately approved by Bemis shareholders, resulted in the creation of New Amcor (the "Transaction").

Prior to the Transaction, Bemis was a Missouri corporation with approximately 16,000 employees worldwide that supplied flexible and rigid packaging products to food, consumer products, healthcare, and other companies. Am. Compl. ¶¶ 2, 21, 46. In 2017, Bemis launched a reorganization plan called "Agility," which was a multi-pronged approach designed to "fix, strengthen, and grow" its business. Id. ¶ 2; Proxy at 76. According to the Amended Complaint, Bemis's "results and [its] own public statements demonstrated that the Company was headed for a turnaround." Am. Compl. ¶ 2. A Bemis press release dated July 26, 2018 that was filed with the SEC as an exhibit to Bemis's Form 8-K,¹ however, announced that, while Bemis reported strong earnings for the second quarter of 2018 and continued progress on Agility, Bemis revised downward its full-year 2018 earnings per share guidance, which is generally considered a marker of a company's profitability. Dkt. 24-3 at 3; see also Am. Compl. ¶¶ 52-54.

Amcor was a similar, though larger, corporation based out of Australia. See Am. Compl. ¶ 36. Prior to the Transaction, Amcor "was a global leader in responsible packaging solutions, supplying a broad range of rigid and flexible packaging products into the food, beverage, healthcare, personal care and other fast moving consumer end markets," with "around 195 sites in over 40 countries" and "approximately 35,000 employees." Id. Beginning in 2018, Amcor approached Bemis with a number of offers for a merger between the two companies.

First, on March 23, 2018, Amcor submitted a proposal to Bemis's Board to acquire Bemis. Am. Compl. ¶ 58; Proxy at 80. Under the terms of this first proposal, Bemis shareholders would own 28% of the combined company and would receive 4.8 Amcor shares for each Bemis share, implying a valuation of $52.00 per Bemis share. Am. Compl. ¶ 58; Proxy at 80. Amcor estimated that the deal would provide synergies of approximately $6.00 per Bemis share in value for each Bemis stockholder, resulting in a total per-share implied valuation of approximately $58.00 per Bemis share. Am. Compl. ¶ 58; Proxy at 80. Goldman Sachs & Co. LLC ("Goldman"), Bemis's longtime financial advisor, reviewed the offer and, in early May 2018, presented Bemis's Board with preliminary financial analyses of the potential merger and Bemis's other options, after which the Board rejected the proposal. Proxy at 80-81. Bemis continued to entertain other offers around this time and met with a private investment company to discuss a different potential transaction. Id. at 81.

Amcor submitted a revised proposal to Bemis's Board on June 5, 2018, now offering an exchange ratio of 5.0 Amcor shares per Bemis share, implying a valuation of $52.61 per Bemis share. Am. Compl. ¶ 60; Proxy at 82. This proposal would have resulted in Bemis shareholders owning approximately 28.4% of the combined company. Proxy at 82. Amcor estimated that the combined company would realize over $7.00 per Bemis share in additional value, providing a total per-share valuation of approximately $60.00. Am. Compl. ¶ 60; Proxy at 82. On June 15, 2018, Bemis's Board conducted another call during which, among other things, Goldman presented its preliminary financial analyses regarding Amcor's revised proposal. Proxy at 82. Defendant William F. Austen, then-Bemis's President, Chief Executive Officer, and a member of the Board, see Am. Compl. ¶ 22, conveyed to Amcor that Bemis's Board was supportive of conducting further analysis of a possible Bemis-Amcor merger, but asked that Amcor increase the fixed exchange rate in its proposal to 5.2 Amcor shares for each Bemis share. Proxy at 82. And as before, Bemis continued to explore other options by engaging in discussions with other parties regarding different possible transactions. Id.

On June 20, 2018, Amcor submitted a second revised proposal, in which it offered to acquire Bemis at a ratio of 5.1 Amcor shares per Bemis share, implying a valuation of $53.40 per Bemis share. Am. Compl. ¶¶ 61-62; Proxy at 82-83. This second revised proposal entailed Bemis shareholders owning approximately 28.8% of the combined company. Proxy at 83. Amcor continued to suggest that the Transaction would deliver over $7.00 per Bemis share in additional value, resulting in a valuation of approximately $61.00 per Bemis share. Am. Compl. ¶¶ 61-62; Proxy at 83.

Two days after receiving this second revised proposal from Amcor, Bemis's Board held an update call attended by representatives of Goldman and others. Proxy at 83. During this June 22, 2018 call, Austen summarized Amcor's most recent proposal and further explained that another party with whom Bemis had discussed a possible combination had not submitted a proposal for such a transaction. Id. As reported in the Proxy, "[a]t the end of the discussions, Bemis’ board of directors directed Bemis’ executive management team and outside advisors to continue the parties’ due diligence investigations regarding a potential combination of Bemis and Amcor and to begin negotiations regarding the terms and conditions of a definitive transaction agreement." Id.

Throughout late summer of 2018, Bemis and Amcor negotiated the Transaction, Am. Compl. ¶ 63, and according to the Proxy, Bemis conducted significant due diligence, Proxy at 83-84. As examples, the Proxy reported that, on June 25, 2018, members of the executive management teams of Bemis and Amcor "held an organizational call to plan mutual due diligence, transaction structuring, and related matters," id. at 83, and that Bemis and Amcor met for "reciprocal management presentations" regarding their respective businesses and synergy opportunities that could be achieved from the Transaction on June 28 and 29, 2018 and July 18, 19, and 20, 2018, id. at 83, 85. The Proxy further reported that during a July 6, 2018 Board meeting, Austen "led a discussion of the due diligence process with Amcor, including a report on the reciprocal management presentations that had occurred the prior week, and including the identification and validation of potential synergy opportunities that could be achieved in the potential transaction." Id. at 84. A few days later, on July 9 and 10, 2018, Bemis and Amcor opened data chat rooms in connection with the ongoing due diligence regarding the potential transaction. Id. Later in the month, at a July 24, 2018 meeting with the Board, Austen "reported on the recent series of reciprocal management presentations by Bemis and Amcor and on the updated analysis of the synergies that would be expected to result from a combination of the two companies," and "members of executive management summarized the status of due diligence and other key work streams related to consideration of the proposed Amcor transaction." Id. at 85.

Then, on July 26, 2018, Bemis entered into an engagement letter with...