Former E-House investors lose bid to sue $1.06 billion buyout

(Reuters) – A federal judge in New York has kicked out the former shareholders of E-House (China) Holdings Ltd with a class action proposal accusing the directors of the Chinese real estate companies of plotting to lower its share price prior to in a take-private deal that valued the company at $1.06 billion.

U.S. District Judge Edgardo Ramos said on Wednesday that he dismissed the lawsuit from Altimeo Asset Management and Maso Capital Investments because the investment firms failed to show how E-House directors made misleading statements or omitted vital information in their disclosures.

Labaton Sucharow and Pomerantz’s attorneys representing the former shareholders did not immediately respond to requests for comment. Nor did E-House’s lawyers van Skadden, Arps, Slate, Meagher & Flom.

E-House management announced in June 2016 that it was partnering with social media site operator Sina Corp to purchase E-House, resulting in its delisting from the New York Stock Exchange, according to a press release. The company went public again on the Hong Kong Stock Exchange in 2018 with a value of more than $2.65 billion, according to Wednesday’s opinion.

Altimeo and Maso sued the company last year, alleging it had deliberately noticed lowered projections in its filings with the U.S. Securities and Exchange Commission in order to induce public investors to sell their shares at low prices, according to a report. amended complaint.

The former shareholders claimed that the company had simultaneously issued higher projections to attract private investors to contribute to the company after the transaction.

When moving to reject the suit in January, E-House argued that the passage of time and the alternative projections did not mean that the revealed projections were false and misleading. The company also said the buyers’ reasoning to take the company private was not false or misleading just because the company went public again.

Ramos agreed with E-House that the company had included adequate warnings in its disclosures and that the existence of additional forecasts did not mean the disclosures were misleading.

The case is In Re E-House Securities Litigation, US District Court for the Southern District of New York, No. 1:20-cv-02943.

For Altimeo: Carol Villegas and David Schwartz of Labaton Sucharow

For Maso: Jeremy Lieberman and Michael Grunfeld of Pomerantz

For E-House: Scott Musoff and Robert Fumerton of Skadden, Arps, Slate, Meagher & Flom