The largest shareholder in Melbourne-based secure cloud backup software company Dropsuite (ASX: DSE) has been ordered to stop selling shares ahead of a vote over a proposed $420 million takeover from IT automation company NinjaOne.
Topline Capital has sold almost $82 million worth of Dropsuite stock since late January when the company announced it had entered an agreement with its US suitor, highlighting Topline's support for the deal with a 31 per cent holding at the time.
That holding has since declined to 10.47 per cent with close to half of Topline's share sales, worth $37 million, announced to the market on the same day that the Takeovers Panel revealed a complaint had been received from another Dropsuite investor.
)
Headed by Luke Cummings, Sydney-based merger arbitrage firm Harvest Lane Asset Management filed an application to the Takeovers Panel alleging that in light of Topline's share sales, the intention statement for the acquisition may have been given on a knowingly misleading basis.
Harvest Lane submitted to the panel that the announcement did not indicate that Topline had reserved the right to sell Dropsuite shares before voting in favour of the scheme.
The merger arbitrage firm is seeking orders from the Takeovers Panel that Topline return to its 31 per cent shareholding.
The acting president of the peer review body, Tania Mattei, has not gone that far but has taken steps with interim orders to halt further sell-downs.
Mattei's orders state that, without her or an appointed panel's consent, Topline Capital Management LLC, Topline Capital Partners LP and its associates must not sell, transfer or otherwise dispose of any shares or interests in shares in Dropsuite, or decrease their voting power in the company.
"The interim orders have effect until the earliest of further order of the Acting President or the Panel (once appointed), determination of the proceedings or 2 months from the date of the interim orders," the Takeovers Panel said.
Enjoyed this article?
Don't miss out on the knowledge and insights to be gained from our daily news and features.
Subscribe today to unlock unlimited access to in-depth business coverage, expert analysis, and exclusive content across all devices.
Support independent journalism and stay informed with stories that matter to you.
Subscribe now!
Help us deliver quality journalism to you.As a free and independent news site providing daily updates during a period of unprecedented challenges for businesses everywherewe call on your support