Robbins LLP: Acquisition of Health Net, Inc. (HNT) by Centene Corporation (CNC) May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Health Net, Inc. (NYSE: HNT) by Centene Corp (NYSE: CNC). On July 2, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Centene will acquire Health Net. Under the terms of the agreement, Health Net shareholders will receive $28.25 in cash, and 0.622 shares of Centene for each share of Health Net they own, the value of which is equivalent to $78.57 per share of Health Net.
Is the Proposed Acquisition Best for Health Net and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Health Net is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $78.57 merger consideration represents a premium of only 20.8% based on Health Net’s closing price on July 1, 2015. This premium is significantly below the average one-day premium of nearly 44.4% for comparable transactions within the past three years.
On May 4, 2015, Health Net reported strong earnings results for its first quarter 2015. Total revenues for the quarter were $3.9 billion, an increase of 28% from the first quarter of 2014. GAAP net income for the quarter was $30.0 million, an increase of 4.2% over the first quarter of 2014. Additionally, Health Net has beat consensus analyst estimates for adjusted net income in every quarter for the past year, and beat estimates for adjusted EPS in three out of the past four quarters. In commenting on these results, Health Net President and Chief Executive Officer Jay Gellert remarked, “We are pleased that our strong 2014 performance is continuing into 2015. Enrollment growth in Medicaid expansion and the California exchanges remained strong, we continued to experience moderate health care cost trends and our administrative expense ratio reflected successful cost management during a period of enrollment growth.”
In light of these facts, Robbins LLP is examining Health Net’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Health Net shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Health Net shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.