11/22/2023
Avantax Shareholders Approve Sale to Cetera
Wealth Management (11/22/23) Donachie, Patrick
Avantax (AVTA) shareholders overwhelmingly supported the merger between the tax-focused wealth management firm and Cetera Holdings at a special shareholder meeting Nov. 21, according to U.S. Securities and Exchange Commission (SEC) filings. Avantax announced the move to sell to Cetera in an all-cash $1.2 billion deal in September, with shareholders cashed out at $26 a share. The move would take Avantax private and delist it from Nasdaq, with the remnants of the company operating as a separate unit within Cetera. In addition to voting to support the merger, shareholders agreed by a wide margin that remuneration “may be paid or become payable to (Avantax’s) named executive officers that is based on, or otherwise relates to, the merger.” Previous SEC filings indicated Avantax CEO Chris Walters, CFO and Treasurer Marc Mehlman and Chief Legal Officer and Corporate Secretary Tabitha Bailey all intended to step down after the transaction closed. Other filings indicated Walters could receive a “golden parachute” of up to $21.5 million with the finalization of the transaction. Earlier in 2023, Avantax changed its name from Blucora and sold its tax software business, but it faced rising calls from activist investors to weigh selling the company, including from Engine Capital, which owned approximately 2% of Avantax shares. Engine urged Avantax to consider a sale because of its holding company structure, competitive positioning shortfalls and that improvements in recruitment and advisor satisfaction made a sale more attractive to purchasers. In October, Avantax also revealed through SEC filings that it faced multiple lawsuits from shareholders claiming the Cetera deal could shortchange shareholders and that the proxy statement touting the deal omitted material information. The plaintiffs demanded the Cetera transaction be put on hold until the disclosures were made, including information on managements' conflicts of interest, post-employment agreements and some financial forecasts for Avantax. Avantax denied that the additional disclosures were legally necessary, but filed an amended regulatory statement with the information, “in order to moot the unmeritorious disclosure claims, alleviate the costs, risks and uncertainties inherent in litigation and provide additional information to its stockholders.” Avantax management has fought numerous battles against activist investors over the years. In 2021, Ancora waged a proxy fight against Blucora, saying management failed to find synergies between Blucora’s roll-up of tax-focused b/ds, and its legacy professional tax software, resulting in a stock price fall (shareholders voted to retain the board members). Later that year, Ancora also pressed the board of directors to sell its online tax prep unit, which it eventually did in November 2022. In February 2022, Engine Capital also pressed Blucora to attain three seats on the board.
Read the article