Squarespace’s $7 Billion Sale Draws Scrutiny From Pension Fund

Squarespace Inc.'s founder and private equity backers may have steered it into an underpriced $7.2 billion take-private buyout that favors insiders standing on both sides of the deal, according to a preliminary shareholder lawsuit.

A pension fund is suing the software company for internal documents, pointing to concerns about the fairness of the two-part sale to a consortium led by Permira Advisers LLC. The second stage of the transaction—a short-form merger squeezing out the public investors remaining after a $46.50-per-share tender offer—is expected to close by Oct. 17.

The suit, filed Oct. 10 in Delaware’s Chancery Court, says ...