Insight affiliate points to possible material adverse effect in going-private deal with Meadow Valley

By Lisa Kerner

Charlotte, N.C., Dec. 1 - An Insight Equity I LP affiliate, Phoenix Parent Corp., believes Meadow Valley Corp. may have suffered a material adverse effect as defined under the merger agreement between Insight and Meadow Valley that could prevent the merger's close.

Phoenix Parent believes a material adverse effect may have occurred as the result of an alleged decrease in the fair market value of Meadow Valley in excess of $6 million since the date of the merger agreement, a Meadow Valley news release said.

In July Meadow Valley, a Phoenix construction materials company, agreed to be taken private by the Insight affiliate for $11.25 per share in cash.

While Meadow Valley does not believe it has suffered a material adverse effect, the company's special committee of the board of directors plans to discuss the issue with Phoenix Parent.

Termination of the agreement could result in expensive and time-consuming litigation, Meadow Valley said.

The merger agreement includes termination rights for both companies, with fees of $1.5 million and approximately $2.5 million payable under certain specified circumstances.

As previously reported, the total value of the transaction, which is not subject to a financing condition, is approximately $61.3 million.

The deal is slated to close before Dec. 31, subject to shareholder approval.

Insight is a Dallas-based investment company.

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