Colorado stockholder sues to stop Carbon Black-VMWare deal

BOULDER  — A Colorado shareholder is suing to stop VMWare Inc.’s (NYSE: VMW) $2.1 billion bid to buy IT security firm Carbon Black Inc. (Nasdaq: CBLK).

According to the suit filed in the U.S. District Court of Colorado, shareholder Daniel Frey alleges that Carbon Black failed to provide multiple details it used in valuing itself when it solicited its shareholders to tender their holdings to VMWare at $26 per share earlier this month. The suit also argues that Morgan Stanley & Co. LLC, Carbon Black’s financial adviser on the deal, failed to make key conflict-of-interest disclosures because it previously advised Dell Technologies Inc. (NYSE: DELL) on other deals. Dell is VMWare’s majority shareholder.

Carbon Black is based in Waltham, Massachusetts, but opened an office on Boulder’s Pearl Street Mall last September that houses about 120 employees.

Frey is requesting that the court prevent the acquisition from proceeding, or to declare damages to shareholders if the two companies tie up before the case reaches trial.

Six other suits have been filed in Delaware, Massachusetts and New York to stop the acquisition. VMware said it expects to close the deal by the end of January 2020.

Carbon Black declined to comment Wednesday afternoon, while VMWare did not respond to a request for comment.

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