Overview
On August 30, 2024, the court granted preliminary approval of a $2.2 million settlement in this certified securities class action alleging that Bowl America’s board of directors acted in bad faith when approving a merger with Bowlero Corp.
Shareholders of Bowl America, Inc. allege that Bowl America entered into an unfair, misleading, and grossly inadequate merger with Bowlero Corp. Plaintiffs allege that Defendants acted in bad faith and breached their fiduciary duties to Bowl America shareholders by approving a merger contract between Bowl America and Bowlero containing an excessive termination fee, effectively precluding another bidder from making a higher offer to purchase Bowl America.
Cohen Milstein was appointed Co-Class Counsel on June 15, 2023, the same date the class was certified.
Case Background
On May 28, 2021, Bowlero, an owner and operator over 300 bowling centers in North America and the owner of the Professional Bowlers Association, announced that it had entered into a definitive merger agreement with Bowl America (NYSE American: BWL-A), which owned and operated 17 bowling centers in Florida, Virginia and Maryland.
In order to facilitate the merger, Bowlero agreed to become a publicly traded company through a merger with a special purpose acquisition company, Isos Acquisition Corp. (the “SPAC Transaction”). The SPAC Transaction anticipated that the Bowlero’s merger with Bowl America would go forward and those assets would be included in the deal. The combined company was valued at around $2.6 billion dollars.
Specifically, Plaintiffs allege that instead of leading Bowl America, a proven, debt-free and valuable company, into the future following a temporary shutdown due to the COVID-19 pandemic, the Board elected to quit, betraying the Company’s shareholders, and seeking to liquidate their personal holdings at the earliest opportunity through a forced sale of the Company at a discount to its market price and far below its intrinsic value, while simultaneously issuing a materially false and misleading Proxy Statement on Schedule 14A dated July 13, 2021 – and breaching its fiduciary duties in the process.
Plaintiffs further claim that certain of the Director Defendants had complete control over the Company and controlled a majority of the votes on the Merger largely by virtue of their holdings of Class B stock which entitles them to ten (10) votes per share, while Plaintiffs and similarly situated class members hold shares of Class A stock entitling them to just one (1) vote per share. As such, Defendants’ voting control enabled them to approve and force the closing of the Merger at the grossly unfair and below market price of $44 million dollars, when just the unencumbered real estate owned by Bowl America had a value in excess of $50 million dollars.
Plaintiffs further allege that Defendant Duff &Phelps, separately and in concert with Bowlero, aided and abetted Bowl America’s Board in breaching its fiduciary duties by providing financial advice, valuation analyses, fairness opinions and various other advisory services to the Company and the Board.
Case name: Anita G. Zucker, et al. v. Bowl America, Inc., et al., Case No. 1:21-cv-01967-SAG, United States District Court for the District of Maryland