Investors hit the board of directors of Good Technology Corp. with a shareholder class action in Delaware state court on Monday that seeks to block BlackBerry’s $425 million acquisition of the mobile security provider, saying the deal significantly undervalues the company.
The suit comes in the wake of BlackBerry’s September announcement of an all-cash deal to acquire California-based Good Technology.
According to the suit, the BlackBerry deal is being driven solely by the self interests of several venture capital firms that control Good Technology and its board, namely Oak Investment Partners, Draper Fisher Jurvetson, Riverwood Capital, Lazard Technology Partners and Rustic Canyon Partners, which hold most of Good Technology’s preferred stock.
Moreover, Good Technology has turned down better offers in the past year, including one for $825 million, nearly double BlackBerry’s offer. The investors claim instead of pushing a deal which maximized value for common stockholders, Good Technology Chair and CEO Christy Wyatt pushed for a “retention plan†so that she and her management team could be guaranteed millions of dollars in cash after the BlackBerry deal is consummated.
After debt and other expenses, the BlackBerry deal would give only around $40 million to common stockholders while the preferred stockholders will receive approximately $250 million, $165.4 million of which will wind up in the pockets of the venture capital firms. Six of nine of Good Technology’s board of directors are managing directors or founders of the venture capital firms, the investors said.
“The VC firms do not care how the common stock is priced in any change of control transaction,†the investors said in the complaint. “They want to exit the company and care only about getting paid their liquidation preferences.â€Â
In addition to a block of the deal, the suit seeks unspecified damages.
When the proposed merger was announced, BlackBerry said Good Technology has a strong presence in businesses and governments around the world and would bolster its enterprise mobility business as BlackBerry revamps itself with software-driven buys.
Good Technology serves more than 6,200 organizations, including more than half of the Fortune 100, all of the Fortune 100 commercial banks, aerospace and defense firms, and leading companies in health care, manufacturing and retail, according to BlackBerry. More recently, it said Good Technology has been making a splash in the wearables market  its software platform is used to secure the Apple Watch.
Meanwhile, Good Technology gets to team up with the likes of a larger publicly traded company, opening the door to additional customer and partnership opportunities. BlackBerry already is the mobility partner of all G7 governments, 16 of the G20 governments, some of the largest global banks and law firms, and the some of the largest managed health care, investment services, and oil and gas companies, it said.
