The safety-sponge maker agreed in January to the $2.22-per-share acquisition. By Feb. 25 PSTX stock owners had filed 4 lawsuits seeking class-action status in California and Delaware, according to a regulatory filing.
"Plaintiffs challenge the proposed acquisition of the company by Stryker and disclosures made in the definitive proxy statement," according to the filing.
Patient Safety said the parties agreed in principle to settle the cases March 11, pursuant to additional disclosures about the run-up to the deal with Stryker – including the news that supply & distribution partner CareFusion and 4 other would-be acquirers passed on Patient Safety.
"Cardinal indicated that it valued Patient Safety below Patient Safety’s market capitalization and as a result did not intend to make an offer for Patient Safety or otherwise pursue an acquisition," according to the filing. Their distribution agreement gave Cardinal the right of 1st negotiation, Patient Safety said.
BofA Merrill Lynch, which brokered the negotiations for Patient Safety, contacted 22 potential buyers, with 5 including Stryker eventually inking non-disclosure agreements. Three of those, identified only as "Company A," "Company C" and "Company D," decided not to bid over "an inability to reach a valuation that would be acceptable to Patient Safety," the filings show. Company D also said it was concerned that the buyout wouldn’t be a strategic fit, according to the filings.
A 4th player named as "Company B" also expressed interest verbally, regulatory filings show, but Patient Safety’s board deemed the verbal bid "insufficient to move forward in the process."
Patient Safety said the agreement with the purported class-action plaintiffs does not include any admission of guilt.
"The company and the other defendants have vigorously denied, and continue vigorously to deny, that they have committed or aided and abetted in the commission of any violation of law or duties or engaged in any of the wrongful acts that were or could have been alleged in the referenced lawsuits, and expressly maintain that, to the extent applicable, they diligently and scrupulously complied with any applicable fiduciary and other legal duties and are entering into the contemplated settlement solely to eliminate the burden and expense of further litigation, to put the claims that were or could have been asserted to rest, and to avoid any possible delay to the closing of the Merger that might arise from further litigation," the company said.
The Stryker offer represents a 59% premium over PSTX’s $1.40 close the last business day before the deal was announced. Patient Safety and its SurgiCount Medical subsidiary developed the Safety-Sponge System, a platform for identifying and tracking surgical sponges in order to ensure that none are left inside patients following surgery. The mobile SurgiCounter keeps track of bar-coded sponges, providing reports and alerting surgeons as to how many sponges are in or out of patients and how many are left.