HealthSpring Investors File Lawsuit Against Directors To Block Sale

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Company Name(s): 
HealthSpring
Case Name: 
HealthSpring Deal Case 10/28/2011
Case Status: 
Lawsuit Filed
Affected Securities
NYSE: HS
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 
10/28/2011
Summary: 

San Diego, Oct. 28, 2011 (Shareholders Foundation) -- An investor in HealthSpring (NYSE:HS) shares filed a lawsuit in State Court against directors of HealthSpring Inc in effort to block the proposed takeover of Health Spring Inc by Cigna Corp for $55 per share.

According to the complaint the plaintiff alleges that the defendants breached their fiduciary duties owed to NYSE HS stockholders arising out of the attempt to sell HealthSpring at an alleged unfair price via an unfair process to Cigna Corp.

On Monday, October 24, 2011 HealthSpring, Inc. (NYSE:HS) and Cigna Corporation (NYSE: CI) announced that they have signed an agreement under which Cigna Corp. will acquire all the outstanding shares of HealthSpring for $55 per share in cash or a total transaction value of approximately $3.8 billion. HealthSpring, Inc said the offer represents a 37% premium over the closing stock price on Friday October 21, 2011.

However, the plaintiff alleges the $55offer undervalues HealthSpring and defendants failed to maximize the possible price for HealthSpring stock given the company’s anticipated growth.

Indeed, HealthSpring, Inc has performed well for its investors in the past. Its annual Revenue rose from $1.57billion in 07 to $3.13billion in 2010 and its Net Income rose from a Net Loss of $86.46million for 2007 to a Net Income of $194.22million in 2010. For the second quarter 2011 HealthSpring reported an increase in its second quarter Revenue from $768.48million last year to $1.38billion this year and its second quarter Net Income increased from $55.77million to $83.92million. Additionally, shares of HealthSpring, Inc (Public, NYSE:HS) grew at an exceptional growth rate over the past years. NYSE:HS stocks grew from as low as $5.23 per share in March 2009 to as high as $48.20 in July 2011.