Facts

Maxar Technologies, Inc. is a satellite manufacturer, and it provides satellite-related services to its clients. In addition to its manufacturing business, Maxar also has a related satellite communications business, research and development operations, and a subsidiary called Space Systems/Loral LLC.

In February 2017, Maxar announced its intention to acquire DigitalGlobe, a space imaging company that used satellites to provide high-resolution images of the earth's surface, for $2.4 billion. The acquisition was to be a debt-financed, stock-and-cash transaction, and it resulted in Maxar increasing its debt from $600 million to $3 billion after the merger.

During April and June of 2017, Maxar filed materials with the SEC that registered the stock shares to be issued and exchanged in the merger, and the SEC declared the registration statement effective. Maxar subsequently filed a prospectus. In October 2017, Maxar issued 21 million additional shares of stock to former holders of DigitalGlobe stock, valued at $54.30 per share.

A year after the merger, Maxar announced a $432 million net loss, which was largely attributable to impairment losses and inventory obsolescence in its geosynchronous satellite communications business. After the announcement, the stock dropped from $27.07 to $14.91 per share.

In October 2019, Michael McCurdy filed suit individually and on behalf of similarly situated shareholders against Maxar and several of its officers and directors in Santa Clara County Superior Court.

PLAINTIFF'S CONTENTIONS: McCurdy contended that in the two years preceding the merger, Maxar's geo communications business had collapsed due to competition from lower-cost terrestrial internet options; that between February and June 2017, Maxar laid off 334 employees and cut new business development budgets for its geo communications business; and that despite this collapse in value, Maxar overstated its assets, earnings, and other financial results and metrics on the offering materials filed with the SEC in relation to the merger. McCurdy contended that the defendants had violated various provisions of the Securities Act of 1933 by filing registration statements containing untrue and misleading statements. As a result, McCurdy contended that he and others like him had purchased stock and sustained losses, entitling them to damages.

DEFENDANTS' CONTENTIONS: The defendants denied any wrongdoing or liability and all the plaintiff's material allegations.

Result

The parties reached an agreement wherein the defendants admitted no wrongdoing or liability but agreed to pay $36.5 million dollars to settle class members' claims.