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A Maryland federal judge has given preliminary approval to a nearly $2.2 million settlement, bringing an end to a class action lawsuit that claimed Bowl America’s board of directors acted in bad faith during the company’s merger with Bowlero Corp. The settlement, which was submitted for approval last Tuesday, has been in the works for over three years since Bowlero first announced its acquisition of Bowl America.

U.S. District Judge Stephanie A. Gallagher’s order, issued Friday, sets a fairness hearing for October 31 to determine the final approval of the settlement. If approved, the settlement will resolve claims brought by Bowl America investors who argued that the $44 million acquisition undervalued their shares and failed to account for Bowl America’s real estate assets.

$2.2M Bowling Co Settlement approval : Allegations of an Unfair Deal

The lawsuit centers around Bowlero Corp.'s 2021 acquisition of Bowl America, which involved purchasing all of Bowl America’s outstanding stock at $8.53 per share, including a 60-cent-per-share special dividend paid at the merger's closing. The plaintiffs, however, argued that Bowlero's offer was "wholly inadequate," claiming that it undervalued Bowl America’s assets, particularly its real estate holdings, which were worth more than $50 million before the COVID-19 pandemic.

The plaintiffs alleged that Bowl America's board concealed key details of the deal from shareholders and failed to secure a fair price for the company’s stock. They contended that their shares were liquidated for less than they would have fetched on the open market, ignoring the true value of the company’s assets.

Legal Representation and Next Steps

The plaintiffs are represented by Daniel Sommers and Richard Speirs of Cohen Milstein Sellers & Toll PLLC, along with Brett Krantz of Kohrman Jackson & Krantz LLP. The defendants, which include members of Bowl America’s board and Bowlero Corp., are represented by John Tucker, Jarren Ginsburg, and Jonathan Friedman of Foley & Lardner LLP, as well as Benjamin Schuman, Meagan Pace, and Alexa Ain of DLA Piper.

The upcoming fairness hearing on October 31 will provide an opportunity for any objections to the settlement to be heard. If the settlement is finally approved, it will mark the conclusion of a significant legal battle over the terms and fairness of the Bowl America-Bowlero merger.