Greenwood Village-based Emergency Medical Services, acquired last month in a $3.2 billion deal by a private equity firm, is being peppered with lawsuits in two states alleging the deal intentionally shorts shareholders.
The shareholder lawsuits, filed separately in Denver federal district court and a Delaware state court Feb. 28, each take issue with a $64-per-share sale price that was 9 percent lower than the market price when the agreement was announced Feb. 14.
Each lawsuit alleges board members and corporate owners were to gain most from the deal, shortchanging shareholders.
EMS and the other defendants have not yet filed a response to the allegations.
The Denver lawsuit was filed by Neal Greenberg, a New Jersey investor, and names EMS; its board of directors; purchaser Clayton, Dubilier & Rice; and Onex, a Canadian private equity firm that controlled 82 percent of EMS voting power with only a 31 percent equity ownership.
The Delaware case was filed by three pension funds and names EMS board members and Bank of America Merrill Lynch, which helped both sides of the deal — as adviser to the EMS board and financier to CD&R — a conflict that would reap the banking concern “tens of millions” of additional dollars, according to the lawsuit.
Both cases seek to stop the sale of EMS, one of the nation’s largest providers of emergency medical care. The company runs two business segments: American Medical Response Inc., which provides health care transportation services, and EmCare Holdings, which provides outsourced facility-based physician services.
EMS operates in more than 2,200 communities nationwide.
News of the acquisition dropped shares $7.74, to $62.92 — an 11 percent decline following a 31 percent surge that started in mid-December.
Share prices on EMS have remained flat since, closing Thursday at $63.48.
The lawsuits allege Onex was looking to cash out its investment in the company, a darling among publicly traded companies based in Colorado, and had a hand in the low per-share price. Analysts had predicted the company’s share price could easily top $75.
At issue, too, is $300 million in “transaction costs” that EMS said were necessary to close the deal, an amount the lawsuit claims is at least 10 times higher than costs a deal this size might typically garner.
The Denver lawsuit notes that a $3.2 billion deal spread over 45.5 million outstanding shares would yield a per-share price of $70 — not the offered $64 — evidence of a profit to someone other than shareholders.
David Migoya: 303-954-1506 or dmigoya@denverpost.com
