Opinion ID: 773420
Heading Depth: 3
Heading Rank: 2

Heading: Vencor's Acquisition of Transitional Hospitals Corporation

Text: 97 On May 7, 1997, Vencor announced plans to purchase Transitional Hospitals Corporation. To finance the acquisition, defendants sold $750 million of senior notes, which they exchanged in October for publicly traded notes. According to plaintiffs, the company would not have been able to complete the bond offering had investors known the truth about how the Balanced Budget Act--enacted two months earlier--would affect Vencor. 98 This claim appears to be an off-shoot of plaintiffs' charge that Vencor profited from failing to speak fully about the adverse impact of the Budget Act. We have already concluded that there is a strong inference that defendants knew more than they disclosed about the financial consequences of health care reform. In their allegations concerning stock prices, plaintiffs have shown that defendants had no reasonable basis for making earnings projections without discussing the potential effect of the Budget Act. Unlike the allegations concerning the earnings estimates, though, the complaint does not support its claim for fraud in the Transitional acquisition. As was the case in Comshare, plaintiffs here allege only motive and opportunity to mislead without the factual basis for either. Comshare, 183 F.3d at 553. Vencor made no statements concerning the acquisition of Transitional that can be regarded as misleading or false. 99