PharMerica Investors Take Legal Action

A lawsuit filied on Monday by a pension fund alleges that PharMerica Corp.’s (NYSE:PMC) rejection of a $440.8 million bid from Omnicare Inc. (NYSE:OCR) unfairly shortchanged investors.

In a suit filed in Wilmington Delaware Chancery Court, The Louisiana Municipal Police Employees Retirement System said that the Directors of PharMerica took up defense against the hostile takeover to exercise control of the Louisville, Kentucky based leading provider of pharmacy services, instead of considering Omnicare’s $15 per share bid. The fund inquired a judge to regulate a proper view about the bid to the PharMerica.

The pension fund has also laid in the complaint lodged on September 9 that as Omnicare has revealed a strong obligation to get hands on PharMerica, Omnicare is not going to hang around forever. The pension fund also said that PharMerica shareholders may fail to acquire the chance of gaining a considerable premium on their savings without judicial interference.

The Covington, Kentucky based Omnicare began with an affectionate proposal to purchase PharMerica, offering cash worth $440.8 million to grasp a greater part of the market to dispense drugs to the nursing homes, hospices and hospitals.

When the proposal was first made public, analyst A.J. Rice, from Susquehanna Financial Group said that the agreement would unite the country’s two major institutional pharmacies and might invite inspection from antitrust supervisory bodies.

Company spokeswoman Meghan Stafford said today in a telephone interrogation that PharMerica would not provide any statement on the proceedings.

Omnicare’s proposal was rejected by PharMerica’s board on 23^rd of August and shortly took a takeover defense acknowledged as the “poison pill”, which is planned to formulate acquisition of the company excessively expensive and impossible by putting a upper limit to individual shareholding limit. Thus in order to nullify this defense strategy of the PharMericas’, on September 7 Omnicare filed a suit against the same in Delaware Chancery Court. The pension fund states that PharMerica’s directors are disobeying the legal duties towards its shareholders by repudiating the approval of the bid with Omnicare.

The complaint states that the board of PharMerica should have used Omnicare’s strong interest as an influence to bargain for a higher charge, but it buried itself beneath the defense provided by the Poison-pill. PharMerica’s awkward response to the offer made by Omnicare turns the poison pill into a rooted fortification.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.