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Health Grades, Inc. Investors File Lawsuit

  • If you are a current investor in Health Grades, Inc. (NASDAQ:HGRD) shares, who purchased your HGRD stock prior to Wednesday, July 28, 2010, and/or have information relating the investigation, you have certain options and you should contact the Shareholders Foundation, Inc.

  • To have your information reviewed for options and to receive notifications about this case, please send an email to mail@shareholdersfoundation.com, or call us at (858) 779-1554.

Lawsuit Overview

Company
Health Grades, Inc.
Security
NASDAQ: HGRD

Case Name
Health Grades Deal Case 08/13/2010
Type of Lawsuit
Mergers and Acquisition
Court of Filing
U.S. District Court for the District of Colorado

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Summary

An investor in Health Grades, Inc. (NASDAQ:HGRD) securities filed a lawsuit in Colorado Court against members of Health Grades’ board of directors for allegedly selling Health Grades too cheaply to Vestar Capital Partners V.
Health Grades, Inc., located in Golden, CO, provides ratings of hospitals, nursing homes and home health agencies. According to the complaint the plaintiff alleges that the members of Health Grades’ board of directors breached their fiduciary duties by failing to maximize stockholder value in negotiating and approving the Merger Agreement between Health Grades and Vestar Capital Partners V.

On Wednesday, July 28, 2010, Health Grades, Inc. (HGRD) and Vestar Capital Partners V, L.P. announced an agreement for an affiliate of Vestar Capital Partners V, L.P. to acquire all of the outstanding shares of HealthGrades, Inc. for $8.20 per share. According to Health Grades, Inc its board of directors unanimously approved the agreement and the offer represents a premium of approximately 32% over HealthGrades' 30-day average closing stock price, and a premium of approximately 29% over the closing price of HealthGrades' common stock on July 27, 2010, the last trading day prior to today's announcement.

But the plaintiff alleges, among other things, that the consideration to be received by Health Grades’ shareholders is unfair and inadequate; that the proposed transaction employs a process which is unfair and inadequate and which has not been designed to maximize stockholder value; that the Merger Agreement includes inappropriate “no shop,” “standstill,” and termination fee provisions; that the defendants are attempting to circumvent the requirement of a shareholder vote through a “Top Up Option”, that Health Grades’

Health Grades, Inc. (HGRD) traded before the takeover news at about $6.50, and jumped in response to the announcement to its 52weekHigh oof $8.15 per share on Wednesday, July 28, 2010. But at least one analyst has set a price target of $9.00 per share for HealthGrades stock. Health Grades, Inc. was able to increase its revenue over the past three years. Health Grades, Inc. reported $36.17million Total Revenue in 2007, $39.69million in 2008, and $52.52million in 2009. Over the same time period Health Grades, Inc. Net Income went from $6.75million in 2007 to $7.10million in 2009.