Robbins LLP: Acquisition of Omnicare Inc. (OCR) by CVS Health Corporation (CVS) May Not Be in Shareholders’ Best Interests
Robbins LLP is investigating the proposed acquisition of Omnicare Inc. (NYSE: OCR) by CVS Health Corporation (NYSE: CVS). On May 21, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which CVS will acquire Omnicare. Under the terms of the agreement, Omnicare shareholders will receive $98.00 in cash for each share of Omnicare common stock.
Is the Proposed Acquisition Best for Omnicare and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Omnicare is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $98.00 merger consideration represents a premium of only 6.7% based on Omnicare’s closing price on May 14, 2015. This premium is significantly below the average one-week premium of nearly 30% for comparable transactions within the past three years. Further, the $98.00 merger consideration is below the target price of $104.00 set by an analyst at UBS on May 15, 2015.
On April 29, 2015, Omnicare reported strong quarterly earnings results for its first quarter 2015. Net sales increased to $1.7 billion, an increase of 5.7% compared to the first quarter of last year. Also, adjusted operating income from continuing operations increased 8.5% and cash flows from continuing operations increased 96% to a record quarter level of $336 million. Additionally, Omnicare beat consensus analyst estimates for adjusted EPS and sales in every quarter for the past year. In commenting on these results, Omnicare President and Chief Executive Officer Nitin Sahney remarked, “The first quarter marked a successful beginning to the year with double-digit adjusted cash earnings per share growth. We continued our disciplined approach to growth by optimizing on our core competencies and driving efficiency through our operations. The first quarter of 2015 attests to the success of our organization in providing comprehensive services and positions us well as a key player in the continued evolution of innovative and cost-effective patient care solutions.”
In light of these facts, Robbins LLP is examining Omnicare’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.
Omnicare 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.
Omnicare 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.