Shanda Games Ex-Investors Get Suit Over Freeze-Out Revived (1)

Minority shareholders in Shanda Games Ltd. can proceed with claims that they accepted an undervalued tender offer in a take-private merger because of misleading proxies, a federal appeals court ruled Monday.

The decision clarifies how minority investors who sue over “freeze-out” takeovers can plead their cases.

The fraud allegedly perpetrated on the market supplies a basis for the investors’ reliance on the proxy statements, the US Court of Appeals for the Second Circuit said in a 2–1 decision reinstating the proposed class action against the video game maker and several members of its leadership. And the investors adequately pleaded that ...