When mergers and acquisitions occur for a California company, the transaction between the two companies tends to involve a significant amount of contribution from various areas with a company. When large transactions take place within a company, most executive-level employees are notified or participate in the transaction. Another part of a company that often need to be informed about a substantial transaction that a company is undertaking are the shareholders. A company may be required to recognize shareholder rights as the rights relate to their business transactions.

The California company Epocrates is currently being sued by its shareholders over a potential shareholder rights violation. The California company produces mobile software that is used to recall drug summaries. Earlier, the company accepted a takeover offer from Athenahealth Inc. Athenahealth is a company that primarily provides doctors and hospitals with online services. The takeover between Athenahealth and Epocrates will provide Athenahealth with an iPhone application and allow Athenathealth to expand its electronic records.

Athenahealth’s takeover offer, which was accepted by Epocrates, offered $11.75 per share for San Mateo’s Epocrates. It is noted that the price of $11.75 was 22 percent higher than the closing price for Epocrate. The shareholders for Epocrate claim through their lawsuit that the directors of Epocrate breached their fiduciary duties through the merger agreement. The breach was allegedly caused by the accepted merger price, which the shareholders contend did not adequately compensate them for their public shares. Shareholders can have various rights within a corporate formation and a violation of a shareholder right may create a cause of action against the company.

Source: San Francisco Gate, “Epocrates Inc. sued by shareholders,” Jan. 16, 2013