American Medical Systems Settles Suits Over Merger
American Medical Systems Holdings, Inc., (AMS) has settled two class-action lawsuits that were filed earlier this year by shareholders who claim that the company's board breached its fiduciary duties in connection with AMS' $2.9 billion merger agreement with Endo Pharmaceuticals.
Under the settlement, which was reached Thursday, AMS did not admit to any wrongdoing and said that it entered into the settlement “solely to avoid the costs, risks, and uncertainties inherent in litigation.” Financial terms of the settlement were not disclosed.
AMS announced in April that it entered into an agreement to be purchased for $2.9 billion-or $30 per share-by Endo Pharmaceuticals, a Newark, Delaware-based specialty health-care solutions company that's focused on high-value branded products and specialty generics.
In the month following the announcement, shareholders filed two class-action lawsuits in Hennepin County District Court. Both suits claimed that AMS' board of directors breached its fiduciary duties in connection with the merger agreement with Endo.
Specifically, the shareholders said that the $30-per-share price was unfair and claimed that AMS and its board of directors agreed to the merger to benefit themselves personally.
The lawsuits also said that the company failed to disclose adequate information relating to the merger.
AMS said in a press release that an analysis by J.P. Morgan-AMS' financial advisor for the sale-valued AMS at $25 to $30.75 per share.
AMS has agreed to pay the attorney fees and expenses of the shareholders who filed the suits and said that the payment will not affect the merger agreement, which is expected to close in the third quarter.
The company has also, as part of the settlement, disclosed additional information relating to the merger with Endo-including its reasoning for choosing J.P Morgan as its financial advisor and the process that J.P. Morgan went through to obtain AMS' value- through a press release that the company issued on Thursday and in documents filed with the U.S. Securities and Exchange Commission.
Minnetonka-based AMS was founded in 1972 and became public in 2000. Its medical devices and therapies help restore pelvic health-specifically, they treat incontinence, erectile dysfunction, benign prostatic hyperplasia, pelvic floor prolapse, and other pelvic disorders in both men and women.
When the merger agreement with Endo was announced in April, AMS said that no post-acquisition layoffs or office closures were planned.