Sometimes failed merger negotiations lead to litigation. And sometimes litigation can lead to a countersuit or a separate lawsuit. This is precisely what is happening in Texas. Business owners in Colorado who are contemplating a merger or a buyout of another company should pay attention to developments in this case.
The Texas lawsuit involves two online dating websites. The first site is an older established site with several subsidiaries. The second site was founded by a former executive of the first site in 2014. She had left amid claims she was sexually harassed during her tenure.
The older dating site submitted a buyout offer of $450 million the more recently formed site, which was rejected for being too low. Negotiations subsequently broke off between the companies. The present litigation ultimately came to fruition.
On March 16, 2018, the older site filed a lawsuit against the newer one for reasons unrelated to the merger. The allegations in the petition include unauthorized use of protected intellectual property and misuse of trade secrets. The allegations involve how the competitor’s dating website was designed.
Specifically, the suit claims the newer dating site uses a nearly identical method for members to show interest in one another. The newer company has made its own allegations, claiming the older site has obtained company information through improper means. It is seeking $400 million in damages.
When business executives speak with a business litigation attorney, factors beyond the merits of the case are often discussed. The cost of litigation is a key factor. The company’s reputation and how it is perceived by not only potential customers but investors must always be considered prior to commencing a lawsuit.
Source: Reuters.com “Dating app Bumble sues rival Match Group ,” Jan Wolfe, March 29, 2018.