Disney’s proposed $500 million plus purchase of Maker Studios may have a problem from the past. The former CEO of the multichannel YouTube network wants a California judge to issue a temporary restring order against the planned vote next week on the big ticket merger. “Permitting the April 15, 2014 vote on the Merger to proceed without requiring additional disclosures would irreparably harm Plaintiffs, as well as Maker shareholders, because it would deprive them of the opportunity to make an informed vote in the Merger,” says the redacted and previously sealed application, filed yesterday in LA Superior Court by co-founder Danny Zapplin and three other former Maker execs. The TRO application alleges that something has to be done before it “will be too late” because current Maker execs are “skimming tens of millions of dollars for themselves by kicking back to the other stock adverse to the common shareholder.” The application to Judge Elihu Berle became public today. Disney is not named as a defendant in the matter.
Disney officially announced on March 24 that it was making the move with Maker into the short form online video space. Under the deal, shareholders would be compensated with more than $500 million plus an additional $450 million if performance targets were met. Long story short – it isn’t the $4.1 billion that Disney paid for Lucasfilm, which closed in December last year, but it is a nice chunk of change – especially for a company that has been cutting its Interactive division as Disney recently has.
This particular case and the basis for this week’s TRO application started long before Disney put money on the table for Maker and maybe even before they started talking to the company when Zappin filed a lawsuit last June alleging that he had been improperly shown the door at the company. Essentially, the four are claiming that Maker shareholders aren’t been given the full skinny on the lawsuit because current execs want to “deprive Maker shareholders the right to a return of illegally vested and accelerated share and a higher Merger consideration.” Previously, Zappin and crew claimed that “certain Maker directors illegally issued shares to themselves and diluted the common stock for their own financial gain to the detriment of other Maker shareholders and take control Makers’ board so that they could ‘rapidly create a ‘liquidity event’‘ so that they could sell Maker and obtain significant returns on their investments irrespective of the best interests of Maker and to the detriment of Maker and its shareholders.”
Now it’s up to Judge Berle.
Sanford Michelman, Imran Hayat and Mona Hanna of Encino’s Michelman & Robinson LLP are representing Zappin, Will Watkins, Derek Jones and Scott Katz in the case.