An investor in QuadraMed filed a lawsuit in Delaware Chancery Court on behalf of current investors QuadraMed Corporation (Public, NASDAQ:QDHC), who purchased the QDHC shares before December 08, 2009, over alleged breaches of fiduciary duty in connection with an alleged unfair takeover price was announced.

According to the complaint the plaintiff alleges that QuadraMed is selling itself too cheaply and shareholders would be shortchanged in the $126 million takeover by Francisco Partners. According to the Delaware Chancery Court complaint the plaintiff alleges that QuadraMed "directors have an affirmative fiduciary obligation to obtain the highest value reasonably available," and they are selling the company "for an unfair price" and therefore breach their fiduciary duty.

On December 08, 2009, QuadraMed Corporation (NASDAQ:QDHC) announced that it has entered into a definitive merger agreement to be acquired by Francisco Partners. Under the terms of the agreement Francisco Partners has agreed to acquire all of the outstanding shares of QuadraMed’s common stock (QDHC) for $8.50 per share in cash and all of the outstanding shares of QuadraMed’s Series A Cumulative Mandatory Convertible Preferred Stock for $13.7097 per share in cash. According to QuadraMed the all-cash transaction is valued at approximately $126 million and the proposed purchase price per share of common stock represents a premium of approximately 32.6% to the closing share price of QuadraMed’s common stock on December 7, 2009, the last trading day prior to the public announcement of the transaction, a premium of approximately 33.3% to the 30-day trailing average closing price of QuadraMed’s common stock, and a premium of approximately 7.1% to the 52-week-high closing price of QuadraMed’s common stock.

According to a previous investigation by a law firm “the transaction appears to be unfair” to current investors of QuadraMed Corporation (NASDAQ:QDHC) because the “offer to purchase QuadraMed Corporation (QDHC) appears opportunistically timed to take advantage of the current economic downturn” and is “grossly unfair, inadequate, and substantially below the fair or inherent value of QDHC”. The investigation “concerns whether the QuadraMed Corporation Board of Directors breach their fiduciary duties to QuadraMed (QDHC) shareholders by agreeing to sell the QDHC at an unfair price thereby harming QuadraMed Corporation and its shareholders”, “whether the directors of QuadraMed Corp. may have breached their fiduciary duties by not acting in QDHC shareholders' best interests” “given that the offer price is only a small premium over the $7.94 price the Company's shares traded at as recently as October 14, 2009 and at least one analyst set a price target for QuadraMed stock at $11.00 per share” and “the Company may not have adequately shopped itself around before entering into this transaction and, pursuant to this proposed transaction, Francisco Partners may be underpaying for QuadraMed Corporation, thus unlawfully harming QDHC shareholders”.

Shares of QuadraMed Corporation (QDHC) traded at $8.32per share after the announcement and at about $6.75 per share the day before the news. QDHC shares traded in 2008 at over $10 per share and in 2007 at over $15 per share. QuadraMed Corporation, Reston, VA, provides healthcare information technology (HIT) to hospitals and other healthcare organizations. Its solutions are used by organizations, such as hospitals, which includes community hospitals, academic hospitals, local and regional delivery networks, hospital-based clinics, and governmental agencies. QuadraMed Corporation reported in 2007 Total Revenue of $137.35million with a Net Income of $63million and in 2008 Total Revenue of $150.44million with a Net income of $7.17million