A Medical Device Daily
Just a few scant days after Getinge (Stockholm, Sweden) reported it agreed to acquire Datascope (Montvale, New Jersey) for $865 million cash, the Garden State-based company's board of directors are being investigated for breaches of fiduciary duty and other violations of the state law by New York-based lawfirm Levi & Korsinsky (L&K).
Under the terms of the agreement, Datascope shareholders would receive $53 in cash for every Datascope share they tender, for a total sale price of approximately $865 million in cash. L&K said the price is "unfair" given that the company has a book value of $25.59 per share that includes over $15.80 per share in cash and no debt so that Getinge is effectively only paying approximately $615 million for the company. Also, it said, the $53 price offers shareholders essentially no premium over the company's Sept. 3, closing stock price of $52.95. Furthermore, L&K said the sales process the company conducted was flawed given that, in contravention of their fiduciary duties to maximize shareholder value, the company's board agreed to a ``no-shop'' provision and a $30 million termination fee which will ensure no superior offer will ever be forthcoming. The proposed acquisition is subject to customary conditions and regulatory approvals.
The terms of the agreement were made earlier this week (Medical Device Daily, Sept. 17, 2008).
Datascope, a 44-year-old company, has been quite active this year in terms of deal making. In March the company sold its patient monitoring business to Mindray Medical International (Shenzhen, China) for $202 million in cash ((MDD, March 12, 2008).
After that deal closed Datascope said several third parties that were considering making a bid for the company approached it. Then, just days after reporting it was considering strategic alternatives, including selling itself, Datascope said it would acquire the Sorin Group's (Milan, Italy) peripheral vascular stent business for an undisclosed sum. The company said that deal was the result of its experience as exclusive distributor of the Sorin peripheral stent product line in Europe, in which sales have grown rapidly since the product launch in January 2007 (MDD, June 12, 2008). Then, in August, Datascope sold its vascular closure business to St. Jude Medical (St. Paul, Minnesota) for about $24 million (MDD, Aug. 11, 2008).
In other legalities:
Scott+Scott filed a class action complaint against Signalife (New York) and certain officers and directors in the U.S. District Court for the District of South Carolina. The action was brought on behalf of those purchasing Signalife common stock during the period beginning Jan. 29, 2004 through April 14, 2008, inclusive, for violations of the Securities Exchange Act of 1934.
The complaint against Signalife alleges that during the class period the defendants made materially false and misleading statements concerning, among other things, the company's model 100 ECG heart monitoring device, which the company described as "revolutionary.''
Throughout the class period, the firm said that Signalife touted its heart monitoring product as a marketable and viable product that would be rolled out nationwide through the company's purported marketing partnership with Rubbermaid Medical Solutions (RMS; Huntersville, North Carolina) that would include the formation of a national sales force to market Signalife's model 100 heart monitor. Additionally, during the class period, defendants disclosed the receipt of purchase orders for the model 100 heart monitor and told investors that "we anticipate that the orders should be fully filled by the end of the first quarter of fiscal 2008.'' As a result of these statements, defendants artificially inflated the company's stock price throughout the class period.
However, as the complaint alleges, it became clear at the end of the class period that, among other things, defendants had misled investors by failing to disclose that Signalife had insufficient resources and means to market the model 100 heart monitor and that RMS was not marketing Signalife's heart monitoring product and had no plans to market Signalife's product because it was "not commercially ready for sale.'' Moreover, Signalife revealed that the company was unable to fill its product orders and the company had not made a single sale of its heart monitor during the entire first quarter of 2008. Consequently, the complaint said, the company's stock price plummeted.