Opinion ID: 773420
Heading Depth: 3
Heading Rank: 1

Heading: Vencor's Acquisition of TheraTx

Text: 93 When Vencor announced plans to merge with TheraTx, another provider specializing in rehabilitation care and occupational health, Vencor's chief executive officer, Bruce Lunsford, explained that the acquisition would be accretive to earnings based on projected synergies. Plaintiffs maintain that this statement was false because Vencor also would be acquiring $25 million in bad debt and 26 poorly performing nursing homes from TheraTx. As a forward-looking statement, Lunsford's prediction falls within the safe harbor provisions of the PSLRA. Plaintiffs must plead facts giving rise to a strong inference that Vencor had actual knowledge of the false or misleading nature of the statement. 15 U.S.C. §78u-5(c)(1)(B). The complaint is too conclusory in this regard to satisfy that standard. Naturally, Vencor's management would expect and publicly anticipate favorable results from its merger. We doubt that defendants would have completed the merger knowing that the deal would not be accretive to earnings. 94 Plaintiffs also point to Lunsford's statement that we successfully integrated the operations of TheraTx as false because computing incompatibilities yet remained. However, plaintiffs fail to explain how computer problems precluded the successful integration of the companies. The allegations do not reveal Lunsford's statement to be false or misleading. 95 Plaintiffs have not stated a claim for securities fraud in connection with Vencor's acquisition of TheraTx. 96