May 9 (Bloomberg) -- Catalyst Health Solutions Inc. was sued by a pension fund that claims the pharmacy benefit manager failed to get the best price in a $4.4 billion takeover by SXC Health Solutions Corp.
Officials of the Massachusetts-based Haverhill Retirement System contend in a Delaware Chancery Court lawsuit that SXC’s offer of $28 in cash and 0.6606 shares of SXC stock for each Catalyst share is too low and “does not reflect the true financial position” of Rockville, Maryland-based Catalyst.
Catalyst directors violated their legal duties to shareholders by “approving an unfair deal” and by “not shopping the company or allowing it to be shopped,” lawyers for the pension fund said in the suit, filed yesterday in Wilmington. Lisle, Illinois-based SXC also helps companies manage drug-benefit plans.
Some pharmacy benefits managers are combining after Express Scripts Inc., the largest one in the U.S., agreed last year to pay $29.1 billion for Medco Health Solutions Inc. That deal would create the largest U.S. manager of companies’ drug plans. A federal judge last month denied a bid by retail drugstores to halt the acquisition, which has received regulatory approval.
Christopher Burns, a Catalyst spokesman, didn’t immediately return a call today seeking comment on the pension fund lawsuit.
SXC, one of the biggest providers of technology for processing prescription claims, was the target of takeover speculation earlier this year. The acquisition offer for Catalyst puts SXC in position to be one of the nation’s largest pharmacy benefit companies, Brian Tanquilut, an analyst with Jefferies & Co. in Nashville, Tennessee, said after the offer was announced April 18.
SXC made at least seven acquisitions since November 2004, according to data compiled by Bloomberg. In January, the company bought Healthtrans LLC for $250 million.
The pension fund’s lawyers contend that Catalyst directors didn’t get enough for Catalyst, which has been recognized as the “fastest growing PBM in the U.S.,” according to the suit.
The pension fund also accused Catalyst directors of wrongfully allowing SXC officials to structure the buyout in a way to bar or discourage other offers.
The case is Haverhill Retirement System v. Catalyst Health Solutions Inc., CA No. 7506, Delaware Chancery Court (Wilmington).
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