It's not technically insider trading but the managers of the companies (by way of the Board of Directors) have a fiduciary duty to the shareholders. Undertaking a bad merger to bail out a different company from one of your investors could be construed as a breach of that duty. Of course, it would take a long court case to determine fault / damages, so it's unlikely to happen, but there are some safeguards to prevent stuff like this (if that is what happened.. which who knows... ).
And I'm not actually sure that's true (though I did before googling it just now):
https://www.lexology.com/library/detail.aspx?g=e24dc4ab-2a77...
https://www.sec.gov/fast-answers/answersinsiderhtm.html