Coventry investors have filed a lawsuit to block Aetna's $5.6 billion acquisition of the insurer, claiming the company's chief executive failed to adequately shop around for the highest offer. The investors said the buyout was structured to discourage other bidders by agreeing to a $167.5 million termination fee if the deal fell apart, Bloomberg reported. The deal also is shortchanging the investors with only a 20 percent premium, whereas shareholders for other insurers recently involved in mergers and acquisitions have received as much as 43 percent premiums.
What's more, Coventry CEO Allen Wise is getting $7.6 million in bonuses as a result of the planned acquisition. "The board's sales process was woefully inadequate," the complaint said, adding that Wise began negotiating with Aetna CEO Mark Bertolini at least four months before telling his directors. Wise wanted to sell Coventry to secure "a timely and lucrative retirement," according to the lawsuit. Article