Weeks before a meeting at which a vote on their planned $600 million merger is set to take place, Omega Healthcare Investors and MedEquities Realty Trust are facing four lawsuits that seek to prevent the deal, the real estate investment trusts said Monday in a filing with the Securities and Exchange Commission.
“MedEquities and Omega believe that the claims asserted … are without merit and intend to vigorously defend against these claims,” the companies said in the prospectus.
The boards of Hunt Valley, MD-based Omega and Nashville, TN-based MedEquities unanimously approved the merger, which would result in a combined company retaining the Omega name — if approved by MedEquities stockholders at the May 15 special meeting at the company’s Nashville, TN, headquarters. Approval of the acquisition by Omega stockholders is not required.
Two lawsuits, filed Feb. 21 and March 17, allege that one or both REITs violated the Exchange Act by making incomplete or misleading statements, or omitting information, from a merger-related form filed with the SEC. Those cases are Brekka v. MedEquities Realty Trust, Inc., et al. and Bushansky v. MedEquities Realty Trust, Inc.
Another lawsuit, Scarantino v. McRoberts et al., filed Feb. 22, alleges the omission of some information from a merger-related form filed with the SEC as well as breaches of fiduciary duties by the MedEquities board in connection with its approval of the merger. John McRoberts is CEO and chairman of the board for MedEquities.
The fourth lawsuit, Russell v. MedEquities Realty Trust, Inc., et al., filed March 29, alleges that MedEquities and its board breached their fiduciary duties by not fulfilling their fiduciary oversight function, by authorizing the filing of a “materially incomplete and misleading proxy statement/prospectus” and by authorizing in the company’s amended and restated bylaws the enactment of “an exclusive venue designation whereby the Circuit Court for Baltimore City, Maryland, is the sole and exclusive forum for certain litigation against the company, or if that court does not have jurisdiction, the U.S. District Court for the District of Maryland, Baltimore Division (the ‘Exclusive Venue Bylaw’).”
Three of the lawsuits were filed as class actions.
The plaintiffs in all of the lawsuits seek “an injunction preventing the consummation of the merger and, in the event the merger is consummated, rescission of the merger or damages, plus attorneys’ fees and costs,” according to the companies. Additionally, the plaintiff in the latter lawsuit seeks a declaration that the Exclusive Venue Bylaw is invalid and an injunction preventing the enforcement of the Exclusive Venue Bylaw.
The REITs announced plans for Omega to acquire MedEquities in January. The transaction was valued at approximately $600 million at the time. See this article for additional information.
