Law Firm Suggests 40% Uplift May Still Have Undervalued Thoratec

Just when you thought the deal was done (it is), and that everyone was happy with it (why wouldn’t they be?), it seems a specialist law firm has spotted an opportunity to squeeze a little more out of the situation. It seems WeissLaw, LLP, which describes itself as a class action, shareholder rights company, is questioning the fairness of the proposed acquisition of Thoratec Corporation by St. Jude Medical.

WeissLaw’s investigation is focusing on “possible breaches of fiduciary duty and other violations of law” by the Board of Directors of Thoratec for agreeing to sell the Company to St. Jude. The transaction, valued at approximately $3.4 billion will see Thoratec shareholders receive $63.50 in cash for each share, a 40% uplift on the last traded price. Surely that’s a pretty solid gain? Well, perhaps not, according to WeissLaw, which is investigating whether Thoratec’s Board acted to maximize shareholder value prior to entering into the agreement.

WeissLaw has issued a press release, inviting shareholders to join the party and see if they can somehow extract just a bit more from the deal. So, do they have grounds for believing Thoratec was undersold? Time will tell, but WeissLaw is pointing to the fact that Thoratec very recently received the CE mark approving the sale of its HeartMate PHP device in Europe and other international countries. It couples this with the observation that HeartMate PHP has a safety advantage over its competitor as reduces patients’ risk of a stroke by one-third. The suggestion is that these two pieces of good news mean Thoratec’s value must be more than the figure represented by the selling price, and how are we to know whether that’s the case?

One could be forgiven for observing that, while it’s obviously important to maximise shareholder value, from the perspective of the seller, a thing called market forces dictates that the buyer will want to protect the interests of its own shareholders, resulting in an iterative process that sees the parties come to some conclusion about what they can both swallow. A 40% uplift, at face value, looks like something most shareholders might be happy with, but no, in the land where money talks loudest, there’s always going to be some entity, no doubt acting with a bit of self-interest of its own, egging folk on to squeeze a bit more out of the deal. It might all be speculative, and it might be that no shareholders sign up, but if a class action goes ahead the end point won’t be reached until the Thoratec Board can be shown to have exercised due process in its own valuation exercise. Or someone writes a check.

Source: PR Newswire


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