Ademi LLP is investigating Diversified Healthcare (NASDAQ: DHC) for possible breaches of fiduciary duty and other violations of law in its transaction with Office Properties.
Ademi LLP alleges Diversified Healthcare’s financial outlook and prospects are excellent and yet Diversified Healthcare’s shareholders are expected to receive only 0.147 shares of Office Properties for each common share of Diversified Healthcare based on a fixed exchange ratio, which represents an implied value of $1.70 per Diversified Healthcare common share, resulting in Diversified Healthcare shareholders owning approximately 42% of the combined company, and Office Properties shareholders owning approximately 58% of the combined company. The transaction agreement unreasonably limits competing bids for Diversified Healthcare by imposing a significant penalty if Diversified Healthcare accepts a superior bid. Diversified Healthcare insiders will receive substantial benefits as part of change of control arrangements.
We are investigating the conduct of Diversified Healthcare’s board of directors, and whether they are (i) fulfilling their fiduciary duties to all shareholders, and (ii) obtaining a fair and reasonable price for Diversified Healthcare.