The Delaware Court of Chancery has granted final approval of the settlement reached in merger litigation brought by the City of Pontiac General Employees' Retirement System and co-lead plaintiffs Norfolk County Retirement System and Plumbers & Pipefitters National Pension Fund. The case, In re RehabCare Group, Inc., Shareholders Litigation, challenged the acquisition of healthcare provider RehabCare Group, Inc. (NYSE: RHB) by Kindred Healthcare, Inc. (NYSE: KND).
As part of the settlement, RehabCare and Kindred agreed to alter key features of the merger agreement, which the complaint alleged unduly limited the corporate sales process. RehabCare also agreed to make a $2.5 million payment to a settlement pool for the benefit of the class of RehabCare shareholders.
RehabCare and Kindred additionally agreed to:
Make certain additional disclosures related to the proposed merger, which are contained in the Form 8-K filed with the SEC and were made publicly available on May 12, 2011
Waive any existing standstill undertakings for the benefit of RehabCare
Lower the Company Termination Fee by 50% from $26 million to $13 million
Eliminate the requirement that Kindred have a three-business day period during which it has the right to match any superior proposal
During the course of an extensive and expedited discovery process, the three plaintiffs, along with court-appointed co-lead counsel, Motley Rice LLC, Labaton Sucharow LLP, Cohen Milstein Sellers & Toll PLLC, and Rosenthal Monhait & Goddess P.A., uncovered important additional facts about the relationship between RehabCare, Kindred and RehabCare's exclusive financial advisor for this transaction, as well as how those relationships affected RehabCare's sales process.
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