Several investigations on behalf of investors of Penwest Pharmaceuticals (NASDAQ:PPCO) were announced after Penwest announced its takeover by Endo Pharmaceuticals.

Penwest Pharmaceuticals Co., located in Danbury, CT, is a drug development company focused on identifying and developing products, which addresses unmet medical needs, primarily for rare disorders of the nervous system. Penwest Pharmaceuticals total revenue rose from $3.31million in 2007 to $8.53million in 2008 and $23.81million in 2009.

On Monday, August 09, 2010, Penwest Pharmaceuticals Co. (Nasdaq:PPCO) announced that it has entered into a merger agreement under which its long-time partner in the development and commercialization of Opana(R) ER, Endo Pharmaceuticals (Nasdaq:ENDP), has agreed to acquire all of the common stock of Penwest for $5.00 per share in cash. The total equity value of the transaction is approximately $168 million.

According to Penwest Pharmaceuticals Co.its board of directors unanimously approved the agreement and the offer represents a premium of 47% over the 30-day average of Penwest shares and 19% based on the closing price of Friday August 6.

But Penwest Pharmaceuticals shares traded before the announcement at $4.84 per share and increased in response to the news to $4.96 per share. Penwest (PPCO) shares traded in 2006 as high as $23.47 per share and as high as $16.77 per share in 2007. And Tang Capital Partners, LP, and Perceptive Advisors LLC, shareholders of Penwest, and Jennifer Good, Penwest's President and CEO, who collectively own 38.6% of fully diluted common stock of Penwest, have committed to tender their shares in the tender offer.

The investigation by a law firm concerns whether Endo Pharmaceuticals, as well as the directors of Penwest Pharmaceuticals breached their fiduciary duties by not acting in Penwest Pharmaceuticals (PPCO) shareholders' best interests in connection with the sale process of Penwest Pharmaceuticals, whether the Penwest Pharmaceuticals Board of Directors breached their fiduciary duty to Penwest Pharmaceuticals (PPCO) stockholders by failing to adequately shop the Company prior to entering into the agreement, whether the Board of Directors breach their fiduciary duties by not seeking a deal that will provide better value for Penwest Pharmaceuticals, and whether Endo Pharmaceuticals is underpaying for Penwest Pharmaceuticals (PPCO), thus unlawfully harming PPCO stockholders.