Houston Municipal Employees Pension System filed a class-action lawsuit alleging Conagra Brands knowingly misled investors about the benefits of its acquisition of Pinnacle Foods.
The $2.8 billion pension fund alleged in the lawsuit filed April 15 in U.S. District Court in Chicago that Conagra and "certain of its officers" violated federal securities laws by misleading investors about the financial benefits of the acquisition.
The lawsuit was filed on behalf of all investors that purchased Conagra common stock from June 27, 2018, through Dec. 19, 2018, and Pinnacle Foods stockholders who received Conagra common stock in exchange for their Pinnacle shares.
The pension fund charged in the filing that "Conagra and its management were aware or recklessly disregarded that the transaction (which closed Oct. 26, 2018) would not result in anywhere near the sort of benefits that the defendants had publicly represented."
The filing notes that Conagra's stock price fell Dec. 20 to $24.28, a 17% drop from the previous day, following the release of Conagra's third-quarter earnings report revealing "Pinnacle's performance had been much worse than defendants had previously represented."
The loss wiped out $2.3 billion in Conagra's market capitalization, the filing said.
David L. Long, the pension fund's executive director, and Dan Hare, Conagra spokesman, could not be immediately reached to provide comment.