An investor in shares of Medco Health Solutions Inc. (NYSE: MHS) filed a lawsuit against directors of Medco Health Solutions in effort to block the proposed merger between Medco Health Solutions and Express Scripts.
According to the complaint the plaintiff alleges that the defendants breached their fiduciary duties owed to Medco Health Solutions Inc. (Public, NYSE:MHS) investors arising out of the attempt to sell Medco Health Solutions too cheaply via an unfair process to Express Scripts, Inc.

On Thursday, July 21, 2011, Medco Health Solutions, Inc. (NYSE: MHS) and Express Scripts, Inc. (NASDAQ: ESRX) announced that they have entered into a merger agreement. Under the terms of the proposed transaction, shareholders of Medco Health Solutions will receive $71.36 per MHS share in cash and stock, or $29.1 billion, based on the closing price of July 21,2011. Shareholders of Medco Health Solutions will receive $28.80 in cash and 0.81 shares of Express Scripts, Inc. (NASDAQ: ESRX) for each NYSE: MHS share they own upon closing of the transaction. Medco Health Solutions, Inc said the offer represents a premium to NYSE MHS stockholders of 28 percent over Medco Health Solutions’ closing share price on July 20, 2011.

Following the takeover announcement shares of Medco Health Solutions Inc. (NYSE:MHS) jumped in open market from $55.88 during Wednesday to $65.91 on Thursday.

However, the plaintiff alleges that the negotiation and structure of the proposed acquisition are the result of an unfair process, the offer by Express Scripts undervalues NYSE MHS stock, and the defendatns breached their fiduciary duty by failing to get the best price.

In fact, NYSE MHS stock traded as early as May 26, 2011 at $64.44, in March as high as $64.35, in February as high as $64.78, and in January even as high as $65.30 per share, leaving Medco Health Solutions stockholders with only a meager premium. Additionally at least one analyst has set the high target price for NYSE:MHS shares at $77 per share, leaving MHS stockholders with potentially no premium at all. Additionally NYSE MHS stocks grew at an exceptional growth rate over the past two years. In fact, shares of Medco Health Solutions Inc. (Public, NYSE:MHS) grew from as low as $34.69 per share in October 2008 to $63.73 in the end of 2010.

Further, Medco Health Solutions Inc has performed financially exceptionally well in the past for its investors. Medco Health Solutions’ 52weeks Total Revenue rose from $44.5billion for 2007 to $65.9billion for 2010. Its Net Income increased from $912million for 2007 to $1,427.30million for 2010. Its first 13weeks Revenue increased from $16.31billion a year earlier to $17.01billion. Its first 13weeks Net Income rose from $320.50million to $333.10million.