A Zoes Kitchen shareholder filed a class-action suit Thursday against the Mediterranean fast-casual chain, alleging a host of Securities and Exchange Commission violations in the wake of the company’s pending acquisition by Cava.
The suit, filed in federal court in Delaware by Jonathan Reigrod, names Zoes Kitchen directors and executives Greg Dollarhyde, Kevin Miles, Thomas Baldwin, Sue Collyns, Cordia Harrington and Alec Taylor.
Representatives from Zoes and Cava did not respond to a request from Restaurant Business seeking comment on the lawsuit.
The suit alleges “incomplete and misleading” information distributed to shareholders surrounding the Cava deal.
It states that Ron Shaich, whose financing group is backing the deal, did not have his financial relationship with the company properly disclosed. It also states that financial analysis of the deal was incomplete.
The complaint further asserts that the defendants were negligent in knowing that the materials presented to shareholders following the transaction’s announcement were misleading and incomplete.
The class-action suit asks that the merger agreement be rescinded.
The $300 million deal between Cava and Zoes Kitchen was announced in August and is expected to close near the end of the year. Zoes has struggled with sales and traffic in recent quarters, reporting a same-store sales drop of 2.3% in the first quarter of 2018.
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