The proposed buyout of St. Louis based RehabCare Group, Inc. has triggered an investigation for investors in RehabCare Group, Inc. (NYSE:RHB) shares questioning the potential unfairness of the deal and possible breaches of fiduciary duties.

The investigation by a law firm concerns possible breaches of fiduciary duties by certain officers and directors at RehabCare Group, Inc. arising out of their attempt to sell RehabCare Group to Kindred Healthcare.

On Tuesday, Feb 8, 2011 RehabCare Group, Inc. (NYSE:RHB) and Kindred Healthcare, Inc. ('Kindred') (NYSE:KND) announced the signing of a merger agreement under which Kindred Healthcare will acquire RehabCare Group. Under the terms of the merger agreement, each stockholder of RehabCare Group common stock will receive $26 per RHB share in cash and 0.471 of a share of Kindred Healthcare, Inc common stock KND or a current value of approximately $35 per RHB share. The aggregate value of the pending transaction approximates $1.3 billion, including approximately $400 million of existing indebtedness.
Shares of RehabCare Group, Inc. (NYSE: RHB) rose in response to the takeover proposal from $25.90 per share on Monday to $37.05 on Tuesday, thus succeeding the current offer. In addition RehabCare Group has performed exceptionally well for its shareholders in the past. Rehabcare has recently beat analysts' expectations, posting fourth-quarter earnings of $17.1 million, or $0.69 per share, up from $655,000 or $0.03 a share, a year earlier. RehabCare Groups 12months Total Revenue went from $611.56million in 2006 to $869.43million in 2009. Its Net Income increased over the same time frame from $7.28million to $23.79million in 2009. RehabCare Group reported for the first three quarters in 2010 a combined nine months Total Revenue that was larger than its total 12months Revenue in 2009. RehabCare Group, Inc. reported a combined nine months Total Revenue of $1004.12million. Its combined nine months Net Income of $45.4million reported for the first three quarters in 2010 succeeded its 12months Net Income of 2009.

Therefore the investigation concerns whether RehabCare Group Board of Directors undertook an adequate and fair sales process to obtain fair consideration for all shareholders of RehabCare Group, Inc. (NYSE:RHB) and specifically breached their fiduciary duties to RehabCare Group (RHB) shareholder by failing to adequately shop the Company before entering into this transaction. A potential class action lawsuit would seek to maximize the amount of money and information RHB shareholders would receive in a buyout, so the law firm.