Robbins Umeda LLP Announces an Investigation of Kinetic Concepts, Inc.
Robbins Umeda LLP, a shareholder rights litigation firm has commenced an investigation into possible breaches of fiduciary duty and other violations of state law by members of the board of directors of Kinetic Concepts, Inc. (NYSE: KCI) in connection with their efforts to sell the company to a consortium comprised of funds advised by Apax Partners, together with controlled affiliates of Canada Pension Plan Investment Board and the Public Sector Pension Investment Board.
On July 13, 2011, Kinetic Concepts announced that it had entered into a definitive merger agreement under which Apax Partners and affiliates will acquire all outstanding shares of the company in a cash transaction. Under the terms of the agreement, Kinetic Concepts shareholders will receive only $68.50 for each share of the company they own. The transaction is expected to close as soon as the second half of 2011.
Robbins Umeda LLP’s investigation focuses on whether Kinetic Concepts’ board is undertaking a fair process to obtain maximum value and adequately compensate shareholders in light of the company’s recent positive financial results. Kinetic Concepts reported first quarter results for fiscal year 2011 that exceeded analyst expectations. On April 26, 2011, the company reported $501.1 million in revenue for the quarter, a 3% increase over the same quarter in the prior year, and above analyst expectations of only $494.2 million. Additionally, the company reported an EPS on a non-GAAP basis and excluding certain costs related to debt refinancing of $1.11, compared to $0.91 from the same period of the prior year, and above analyst estimates of $1.01. Finally, and perhaps most demonstratively, analysts have recently released target prices for Kinetic Concepts that value the company’s stock at $70.00 per share, considerably higher than the offer price that forms the basis of the merger agreement.
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