Legacy Equity Advisors alleges that AT&T Inc. also blocked it from making bids on other assets, instead soliciting bids from less qualified white-owned firms on more favorable terms.
A Black-owned private equity company claims that discrimination was a factor in AT&T’s rejection of its $4.6 billion acquisition bid for Cricket Wireless.
According to Bloomberg, Legacy Equity Advisors alleges that AT&T Inc. turned down its offer for a majority stake in Cricket and blocked the company from making further bids for 13 other available assets, instead soliciting bids from less qualified white-owned firms that received more favorable terms.
During attempts to acquire AT&T assets, the lawsuit alleges that company executives frequently expressed concerns about the ability of an African American-owned firm such as Legacy to secure sufficient financing to close transactions.
“No other Black-owned company submitted a bid for these 14 assets,” Legacy’s lawyers said in the lawsuit, Bloomberg reported, “while at the same time, white-owned companies were allowed to bid and ultimately acquire the assets.”
The lawsuit claims that Legacy owner Marcellus Taylor, formerly of Aldus Equity LLC, secured financing for Cricket from Jay-Z’s entertainment agency Roc Nation, Dallas investor Tom Hicks, and investment firm Bain Capital. He presented the offer during a meeting with AT&T chief financial officer John Stephens in March 2019.
AT&T allegedly turned down the bid but later accepted a $31 million offer from Taylor’s company to buy 88 retail outlets, a proposed deal the lawsuit calls “a sham.”
Taylor’s attorneys claim that AT&T representatives instructed him to take ownership of the stores during the busy holiday season and informed him he was not permitted to hire existing employees, conditions allegedly “designed to block Legacy’s acquisition,” which was not finalized.
Legacy said its investment plan targets African American and Hispanic consumers, who make up most of Cricket’s clientele. The company claimed in its case that AT&T’s advertising efforts had “failed to connect with these groups” and that the company’s brand “wasn’t reaching its potential.”
A representative for AT&T disputed the claims in the lawsuit, contending that the company does not “tolerate discrimination of any kind,” and that any suggestion otherwise is false.
The suit claims Taylor informed AT&T executives he wanted to submit a bid for future assets the company intended to sell. However, he was not allowed to do so for DirecTV, the company’s Puerto Rico cellular operation, or AT&T sites, including in Detroit and Miami Beach.
“To secure a competitive bidding price for these assets, any reasonable, non-racist company in AT&T’s position would have allowed a firm like Legacy to participate in the bidding process,” the company’s attorneys contended in the suit, according to Bloomberg. “Legacy’s money is as good and green as anyone else’s.”
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