With the economy still on shaky footing, investors quite rightly look to see if the vehicles they’ve bought are providing honest value for the prices paid. When the figures don’t seem to add up, investors ought to be concerned.
This week brought more of those concerns to the forefront, as Wisconsin-based Assisted Living Concepts (NYSE: ALC) entered into a definitive agreement to be purchased by TPG, a worldwide private investment firm, with American offices in New York, San Francisco and Austin, Texas.
But soon after the announcement, signs appeared that things weren't quite cricket. Investigations were launched by hordes of law firms on behalf of ALC investors concerning whether the offer and the takeover process are fair.
The deal, subject to approval by a majority of shareholders, would mean that ALC stockholders would receive $12.00 U.S. in cash for each share of Class A common stock; Class B shareholders receive $12.90 U.S. ALC plans to file with the Securities and Exchange Commission and mail to its stockholders a proxy statement regarding the proposed acquisition.
The investigation concerns possible breaches of fiduciary duty and other violations of state law by the Board of Directors of Assisted Living for not acting in shareholders' best interests in connection with the sale process to TPG. It appears the bone of contention is how well the firm is doing, given that ALC shares ran as high as $19.17 as recently as last May.
Moreover, Assisted Living Concepts’ financial performance has improved lately. For instance, it reported that its annual total revenue rose from $228.72 million U.S. in 2009 to $234.45 million U.S. in 2011 and its net loss of around $115,000 U.S. in 2009 turned into a net income of $24.36 million U.S. in 2011. Furthermore, the investigators point out, share prices of ALC have grown significantly since its two-for-one split on June 2011.
Assisted Living operates more than 200 senior living residences comprising more than 9,000 resident units in 20 American states, most of these residences consisting of 40 to 60 units. Residents may receive assistance with the activities of daily living either directly from employees or through the company’s wholly-owned home health subsidiaries. ALC employs approximately 4,600 people.
ALC stock closed Friday at $11.84 U.S., unchanged from the day before.
