DJO Being Sued Over Proposed Sale to ReAble Therapeutics

Medical device maker DJO Inc. said Monday shareholders filed a class action lawsuit against the company, challenging its proposed sale to a unit of ReAble Therapeutics Inc. In July, the company agreed to be bought by a ReAble subsidiary for $50.25 per share in cash. An affiliate of the Blackstone Group is the controlling shareholder of ReAble. The lawsuit was filed Aug. 31 in California Superior Court in San Diego County, DJO said in a filing with the Securities and Exchange Commission. The lawsuit alleges that individual executives named as defendants breached their fiduciary duties of care, good faith and loyalty by approving the proposed merger for an inadequate price, without adequately informing themselves of the company’s highest transactional value, and without adequately marketing the company to other potential buyers. It also claims the company did not make full disclosures in a preliminary proxy. The lawsuit seeks a determination that the defendants breached their fiduciary duties, an injunction of the sale, an order rescinding the sale if it is completed, an order requiring the defendants make corrective and complete disclosures and compensatory or rescission damages, or both. DJO said the lawsuit is without merit. The company said it would file a proxy statement in regard to the sale with the SEC. Shares of DJO closed at $48.55 Friday. SOURCE: Forbes/AP