An investor in Essendant is taking steps toward launching a class action against the office supplies distributor, a move that could cause further delay for Staples, Inc. in its bid to finalize its acquisition of Essendant. Framingham, MA-based Staples is the parent company of Top 40 distributor Staples Promotional Products (asi/120601).

Investor Long Nguyen is accusing Essendant of withholding key details and potential conflicts of interests associated with its merger with Staples, Inc. Nguyen filed a suit in October, alleging that Essendant issued an incomplete and misleading statement with the U.S. Securities and Exchange Commission recommending that shareholders tender their shares for a transaction (which at the time was valued at $996 million) in which their shares would be purchased by Staples for $12.80 apiece.

On Monday, Nguyen asked a Delaware federal judge that Nguyen be named lead plaintiff, according to a report from Law360. Nguyen sought to appoint law firm WeissLaw LLP as lead counsel on the class action. Nguyen told the court he has approximately $13.1 million in Essendant stock -- and thus the largest financial interest in ensuring that all relevant information about the merger is made public.

Nguyen claims that the recommendation statement filed with the SEC fails to provide shareholders with information about potential conflicts of interests faced by Essendant’s financial adviser Citigroup Global Markets Inc. and company insiders. Nguyen said the statement does not present information about fees Citi expects to receive for its work on behalf of Essendant and Staples. There are also outstanding questions regarding discussions and negotiations among executive officers about future employment and participation in the equity of the merged company, according to the complaint.

“This information is necessary for stockholders to understand potential conflicts of interest of management and the board, as that information provides illumination concerning motivations that would prevent fiduciaries from acting solely in the best interests of the company’s stockholders,” said Nguyen, according to the Law360 report.

Given such concerns, Nguyen’s goal is to have the expiration date of the tender offer extended until the relevant information is revealed.

In January, the U.S. Federal Trade Commission approved Staples’ acquisition of Essendant with conditions. “Staples, which is owned by the private equity firm Sycamore Partners, will establish a firewall separating Staples’ business-to-business sales operations from Essendant’s wholesale business,” the regulator said in a statement. “This firewall will restrict Staples’ access to the commercially sensitive information of Essendant’s customers.”

Even so, the deal has not yet been finalized.

The government shutdown had delayed the FTC’s approval process, according to Essendant CEO Ric Phillips in a letter to customers. The review was already complicated by criticisms from Essendant’s dealer and reseller clients that Staples, a long-time competitor, could obtain inside information on them and take sales away. The closure date had been extended twice.

In business nearly 100 years, Deerfield, IL-based Essendant was formerly known as United Stationers. The paper and office products supplier lost $267 million in 2017 as sales declined nearly 7.5% to just above $5 billion amid a changing marketplace disrupted by digitization and other factors.

As a result of the deal, Essendant will become a private company. Staples, which had been publicly listed, went private after being acquired by private equity firm Sycamore Partners in 2017.

With estimated 2017 North American promotional product revenue of $592.9 million, Staples Promotional Products ranked second on Counselor’s most recent list of the largest distributors in the industry.