Actions of Forescout Technologies (NASDAQ: FSCT), a cybersecurity company, fell today after the company announced that it had filed a lawsuit against Advent International, a private equity firm that is in the process of buying Forescout.
The Forescout share price fell 6.2% at 3:24 p.m. EST.
Forescout said it had filed a legal complaint because Advent had violated the terms of its merger agreement between the two companies. Advent reached an agreement in February to acquire Forescout for $ 1.9 billion, or $ 33 per share in cash, which was about 18% premium over the company’s stock price at time.
Forescout said in a press release that it “requests the Court to compel Advent to honor its commitments and to immediately complete the current acquisition of Forescout”. Advent, for its part, said it had not closed the acquisition because a “significant adverse effect” had occurred on Forescout’s business.
Forescout Chairman of the Board of Directors Theresia Gouw said in a statement:
The only change since the joint merger agreement was executed in February is the worsening of the COVID-19 pandemic, which has had a significant impact on global macroeconomic conditions.
Forescout says it has a “solid financial position” and has $ 100 million in cash at the end of March.
Investors have been very unhappy with the uncertainty surrounding the potential acquisition of Forescout and have taken the company’s shares down 40% in the past month. With Forescout now pursuing legal action against Advent, investors will not be reassured that the merger will take place any time soon, which could further stimulate short-term share price movements.