Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—W.D. Mich.: Complaint fails to show false statements about integration of acquisition, (Aug 13, 2026)

By Anne Sherry, J.D.

The defendants were mostly honest about challenges they had implementing 3M’s systems and products following a merger.

A complaint by investors in Neogen Corp. failed to identify any actionable misrepresentations. While the defendants did mislead about their integration of 3M’s customer recordkeeping system, the complaint did not plead that they had actual knowledge that the statements were false or had a motive to mislead (Operating Engineers Construction Industry and Miscellaneous Pension Fund v. Neogen Corporation, No. 25-cv-00802 (W.D. Mich. Aug. 10, 2026)).

The plaintiffs alleged that Neogen and two of its senior officers misled investors about the company’s progress in integrating the product lines it acquired from 3M. Neogen acquired 3M’s food safety business in a $5.3 billion merger that doubled the company’s size. But it was critical that Neogen integrate the 3M systems efficiently; until it did so, it had to pay 3M fees and a percentage of revenue.

Specifically, the complaint challenged statements about the integration of two crucial IT systems: customer resource management (CRM) and enterprise resource planning (ERP). The plaintiffs also said Neogen misled about its manufacturing of new product lines.

CRM integration. The court found that the plaintiffs pleaded some false statements about the CRM integration. The complaint sufficiently alleged that, contrary to assurances, the CRM systems were not combined under a common platform. As a result, the sales team had no way of identifying existing 3M customers so as not to attempt to sell to them.

The fact that combining the CRM systems was only a milestone along the integration process rather than the endpoint did not change this. The complaint alleged a false statement about that milestone. And the statement wasn’t puffery or opinion: it was a provable (or disprovable) fact.

However, the complaint here failed to allow a plausible inference of scienter. The complaint did not allege that the confidential witness or anyone else discussed the inability to access 3M customer data with senior executives, that the issue was a topic of discussion in company meetings, or that the defendants egregiously refused to see what would have been obvious. And the complaint did not allege other facts suggesting scienter, such as insider trading, later disclosure of inconsistent information, an ancillary lawsuit, bribery, or disregard of current information.

ERP Implementation. The defendants’ statements that the ERP integration was “on track” and “on schedule” appeared to be statements of opinion that did not concern facts that could be verified. And even if there were significant challenges in preparing the SAP software for a smooth implementation on the short timeline attempted by Neogen, those challenges alone would not necessarily mean that the integration was not on track or on schedule.

The plaintiffs also challenged statements that the software was “fully operational” and “fully integrated,” but with inefficiencies that would delay order processing and shipping. The plaintiffs’ allegations that the system operated with errors were consistent with the defendants’ public statements that there were inefficiencies in the new system. Even if the statements were misrepresentations, they were not made with scienter, especially given the vagueness with which they were pleaded.

Furthermore, the plaintiffs claimed that a backlog in orders for one type of product belied Neogen’s statements that its shipping performance had improved and was no longer a constraint. But the complaint didn’t explain how this backlog was the consequence of defects in the ERP system that still persisted at the time of the challenged statements, rather than a consequence of the accumulated “inefficiencies” disclosed by defendants before that time, or of other problems plaguing the company

Manufacturing integration. The final category of challenged statements were inactionable puffery or simply were not false. For example, a defendant’s prediction that Neogen would be manufacturing most of the 3M products within nine months was not countered by any facts from which to infer that the defendants didn’t believe they could reach this target. Another statement that the “first” or “initial” phase of manufacturing relocation was complete necessarily impolied that the full process was not complete, and was not misleading.

Similarly, the fact that machinery kept failing actually supported the challenged statements that Neogen was still “ramping up” to full production. The complaint contained no facts to support the conclusory assertion that Neogen was not “ramping up” production, that the product line was not “operational,” or that the company could not achieve full production levels over the following few months.

The case is No. 25-cv-00802.

Judge: Jarbou, H.

Attorneys: Cecilia Eugenie Stein (Grant & Eisenhofer, PA) for Operating Engineers Construction Industry and Miscellaneous Pension Fund. D. Andrew Portinga (Miller Johnson PLC) for Neogen Corp.

Companies: Neogen Corp.

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