Aspect Medical Systems, Inc. sale under shareholder investigation

If you are currently an investor in shares of Aspect Medical Systems, Inc. (NASDAQ:ASPM), and purchased the shares before September 28, 2009, and / or have additional information relating to the investigation, you should contact the Shareholders Foundation.

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Company Name(s): 
Aspect Medical Systems
Affected Securities: 

An investigation on behalf of current investors Aspect Medical Systems, Inc. (Public, NASDAQ:ASPM), who purchased the shares before September 28, 2009, over potential breaches of fiduciary duty and other violations of state law in connection with an alleged unfair takeover price were announced.

The investigation by a law firm focus on potential breaches of fiduciary duty and other violations of state law by the Board of Directors of Aspect Medical Systems, Inc. (Public, NASDAQ:ASPM) arising out of their attempt to sell Aspect Medical Systems to Covidien (NYSE: COV). On September 28, 2009 Aspect Medical Systems, Inc. (NASDAQ: ASPM) and Covidien (NYSE: COV) announced that Covidien has reached a definitive agreement to acquire Aspect Medical Systems. Under the proposed agreement a wholly owned subsidiary of Covidien will pay $12.00 in cash per Aspect Medical Systems, Inc. share (NASDAQ: ASPM)for a total of approximately $210 million. According to Aspect Medical Systems the Boards of Directors of both companies have unanimously approved the transaction.

According to an investigation by a law firm “the transaction appears to be unfair” to current investors of Aspect Medical Systems, Inc. (NASDAQ:ASPM) because the “offer to purchase Aspect Medical Systems, Inc. (NASDAQ:ASPM) at $12 per share appears opportunistically timed to take advantage of the current economic downturn”. The investigation “concerns whether the consideration to be paid to ASPM shareholders is grossly unfair, inadequate, and substantially below the fair or inherent value of ASPM” and “whether the directors of ASPM, including any special committee members, may have breached their fiduciary duties by not acting in ASPM shareholders' best interests in connection with the sale process of ASPM”. Another investigation even calls the deal “suspicious because it appears from a review of the Company's financial statements that the inherent value of the Company's stock is greater than $12.00 per share and also because the Company has agreed to a number of provisions in its agreement with Covidien plc to dissuade any other company from making a better offer.”
Aspect Medical Systems, Inc., located in Norwood, MA is engaged in developing, manufacturing, and marketing an anesthesia monitoring system named BIS system. The BIS system is based on the Bispectral Index technology.

The BIS system provides information that allows clinicians to assess and manage a patient’s level of consciousness in the operating room, intensive care and procedural sedation settings, and is intended to assist the clinician in better determining the amount of anesthesia or sedation needed by each patient. Aspect Medical Systems reported in 2007 Total Revenue of $97.32million with a Net Income of $2.26million and in 2008 Total Revenue of $99.27million with a Net Income of $11.10million. Shares of Aspect Medical Systems, Inc traded at $11.90 per share after the announcement and at about $8 per share before the announcement. Aspect Medical Systems, Inc shares (NASDAQ: ASPM) were down from a 52weekHigh of $11.94 per share, over $18 per share in 2007, and almost $37 per share in 2006.