Robbins Umeda LLP Announces an Investigation of Medco Health Solutions, 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 Medco Health Solutions, Inc. (NYSE: MHS) in connection with their efforts to sell the company to Express Scripts, Inc. (NASDAQ: ESRX).
On July 21, 2011, Medco announced that it had entered into a definitive merger agreement with Express Scripts. Under the terms of the agreement, Express Scripts will acquire all outstanding shares of Medco in a cash and stock transaction. Pursuant to the agreement, Medco shareholders will receive $28.80 and 0.81 shares of Express Scripts Holding Company for each share of Medco they own. Based on Express Scripts’s July 20, 2011 closing price, Medco shareholders can expect to receive the monetary equivalent of $71.36 for each share of the company they own. The transaction is expected to close in the first half of 2012.
Robbins Umeda LLP’s investigation focuses on whether Medco’s board is undertaking a fair process to obtain maximum value and adequately compensate shareholders in light of the company’s recent positive financial results. On July 21, 2011, Medco announced results for the second quarter of FY 2011. The company reported a diluted EPS of $0.96, a 10.3% increase over the same period in the prior year, and above analyst estimates of only $0.94. Moreover, Medco reaffirmed its FY 2011diluted EPS guidance of $3.59 to $3.69 per share, representing growth of 14% to 17% over the previous fiscal year. Additionally, several analysts have released target prices for the company that value Medco’s stock between $72.00 and $77.00, considerably higher than the offer price from Express Scripts.
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