(Updates with excerpts from complaint in third and ninth paragraphs.)
Sept. 12 (Bloomberg) -- PharMerica Corp.’s rejection of Omnicare Inc.’s $440.8 million buyout offer unfairly shortchanged shareholders, a pension fund said in a lawsuit.
Instead of seriously weighing Omnicare’s $15-a-share bid, PharMerica directors adopted an anti-takeover defense to maintain control of the Louisville, Kentucky-based pharmacy- services provider, the Louisiana Municipal Police Employees Retirement System said in the suit filed in Delaware Chancery Court in Wilmington. The fund asked a judge to order PharMerica’s board to properly consider the bid.
“While Omnicare has shown a strong commitment to acquire PharMerica, Omnicare will not wait around forever,” the pension fund said in the complaint filed Sept. 9. Without judicial intervention, PharMerica investors “may lose out on the opportunity to obtain a substantial premium on their investment,” the fund said.
Omnicare, based in Covington, Kentucky, began a tender offer to buy PharMerica for about $440.8 million in cash to seize a majority of the market to distribute drugs to nursing homes, hospitals and hospices.
The deal would combine the country’s two largest institutional pharmacies and might bring scrutiny from antitrust regulators, A.J. Rice, an analyst at Susquehanna Financial Group, said when the offer was first announced.
Thomas Caneris, PharMerica’s general counsel, and David Reno, a company spokesman, didn’t immediately return calls seeking comment on the lawsuit.
PharMerica’s board rejected Omnicare’s offer Aug. 23 and later adopted a so-called “poison pill” takeover defense designed to make acquisitions of the company exorbitantly expensive. Omnicare sued PharMerica in Delaware Chancery Court on Sept. 7 seeking to have the defense invalidated.
The pension fund contends PharMerica’s directors are violating legal duties to shareholders by refusing to negotiate with Omnicare over the bid.
“Instead of using Omnicare’s strong interest as leverage to negotiate for a higher price, the board has decided to hide behind” the poison-pill defense, according to the complaint. “PharMerica’s unreasonable response to the Omnicare offer renders the poison pill an entrenching rampart.”
The case is Louisiana Municipal Police Employees Retirement System v. Collins, CA 6851, Delaware Chancery Court (Wilmington).
--With assistance from Phil Milford and Michael Bathon in Wilmington, Delaware. Editors: Stephen Farr, Peter Blumberg
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