On October 18, 2023, Saxena White filed a shareholder derivative action on behalf of the City of Hialeah Employees’ Retirement System for the benefit of Fidelity National Information Services, Inc., and its shareholders. The Complaint charges current and former members of the Company’s board of directors and executives with violations of Section 10(b) and Section 14(a) of the Securities Exchange Act, breach of fiduciary duty, and unjust enrichment.
In July 2019, Fidelity acquired Worldpay, Inc. for $43 billion, and for three years the Defendants’ represented that the acquisition was a raging success. Unfortunately, the representations were not true. In February 2023, Fidelity announced it would spin off Worldpay—undoing the merger that the Defendants had touted as a success—and further announcing that it would take a write down of $17.6 billion in the value of Worldpay. A few months later, Fidelity announced that it would instead sell 55 percent of Worldpay for $11.7 billion, valuing Worldpay at approximately $18.5 billion, and writing down an additional $6.8 billion. The problems prompting the sale and the enormous write down were well known at the Company, as reflected by, among other things, the statements of confidential witnesses described in the Complaint.
The Complaint alleges that the Defendants breached their fiduciary duties and violated state and federal law by, among other things: (i) failing to conduct proper due diligence on Worldpay—such as having access to the merger data room for just days before signing the merger agreement, (ii) misrepresenting in the proxy statement for the acquisition the condition of Worldpay, including failing to disclose that Worldpay was still in the middle of its prior merger with Vantiv and continued to face substantial integration risks from that merger, (iii) failing to properly oversee the integration, (iv) ignoring red flags of serious problems with the integration—including the departure of nearly all of the senior executives of Worldpay who had signed contracts to stay on at Fidelity, and the failure to integrate such basic systems as the customer relationship management systems, undermining the ability to cross-sell, (v) passing and keeping in place a highly lucrative Worldpay Integration Incentive Plan for executives, even though shareholders had previously objected to such merger incentive plans and voted against this incentive plan in the annual “say on pay” vote, (vi) touting the incentive plan in the proxy statements as having been “highly successful” at driving management’s achievement of critical integration milestones, with full disclosure of the massive problems with the integration only starting after the end of the three-year period to receive bonuses under the incentive plan had closed and as the executives who received tens of millions were fleeing the Company, (vii) spending approximately $3.8 billion on share repurchases in less than two years to boost the price of Company stock while touting the success of the integration in proxy statements and elsewhere, and then later claiming Fidelity needed to spin off Worldpay so more money could be spent on strategic investments for Worldpay, and (viii) insiders selling hundreds of millions of dollars’ worth of stock, profiting from the substantial artificial inflation their misstatements had caused.
On October 18, 2023, Hialeah filed its complaint. On February 8, 2024, the Court denied the Defendants’ motion to bifurcate briefing on the motions to stay and/or dismiss. The parties recently completed briefing the Defendants’ motions to stay and/or dismiss the Complaint.
