Stay current on changes and developments in corporate law with a wide variety of resources and tools.
By Jacob Rund
Kindred Healthcare Inc. shareholders are asking a federal judge to pause the company’s $4.1 billion sale to Humana Inc. and two private equity firms until it fixes “misleading” disclosures.
A proposed class action, filed Feb. 8 in the U.S. District Court for the District of Delaware, alleges the directors of the Louisville, Ky.-based firm omitted important financial projections from its proxy materials related to the merger.
Kindred stockholders will receive $9 in cash per share from the deal, which splits the company into two parts—a home health and hospice business, and a specialty hospital unit.
Humana, also based in Louisville, is buying a 40 percent stake in the stand-alone home health company, with the option for full ownership over time. Private equity groups TPG Capital and Welsh, Carson, Anderson & Stowe will control the hospital unit and the remaining 60 percent of the home health business.
Kindred directors “were, at the very least, negligent in preparing and reviewing” the proxy statement that’s meant to garner stockholder support for the deal, according to the complaint.
The proxy didn’t include free cash flow projections and portions of financial analyses that shareholders need to make an informed decision, it said.
For future events and uncertain figures, “a company may choose silence or speech,” but it may not choose “half-truths,” the complaint said.
The lawsuit claims the merger’s $9 cash consideration is “inadequate in light of Kindred’s recent financial performance and outlook,” pointing to it 52-week high trading price of $11.90. All-cash mergers usually offer significant premiums, not discounts, to trading prices, it said.
The shareholder responsible for the complaint, Mazy Sehrgosha, is asking the court to stop Kindred’s sale unless and until the alleged missing information is included in a new proxy statement. Sehrgosha is also seeking damages.
Kindred didn’t immediately respond to a request for comment.
The case is Sehrgosha v. Kindred Healthcare Inc. , D. Del., No. 1:18-cv-00230-UNA, complaint filed 2/8/18 .
To contact the reporter on this story: Jacob Rund at firstname.lastname@example.org
To contact the editor responsible for this story: Yin Wilczek at email@example.com
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)