Searchlight’s $3 Billion Telecom Deal Hit With Court Challenge

Consolidated Communications Holdings Inc. board members engineered an underpriced $3.1 billion buyout by Searchlight Capital Partners LP while hiding conflicts of interest and an illegal stockholder agreement, according to a lawsuit challenging the transaction.

An investor sued the telecommunications business and its directors, saying they duped shareholders into the take-private sale at a price reflecting one-third of outside value estimates and less than 80% of the board’s own target.

Although Consolidated’s shares soared after news of the transaction in October, two significant stockholders have come out against the deal, which would cede control of the business just as it’s set ...