Saga Group has entered into a definitive agreement to acquire health and social care recruiter, Allied Healthcare International.

The deal is for $3.90 (£2.37) per share, representing a premium of 59% to Allied’s closing price on 28 July, 2011 of $2.45. The aggregate purchase price for all outstanding shares of Allied common stock, including outstanding options, will be roughly $175m.

The terms of the agreement were unanimously approved by Allied’s board of directors.

Completion of the transaction is subject to the approval of Allied’s shareholders and certain other terms and conditions customary for transactions of this type, including regulatory approvals and is expected to occur in Q4 2011.

Meanwhile, law firm Brower Piven, has began an investigation into possible breaches of fiduciary duty to current shareholders of Allied Healthcare International and other violations of state law by the board of directors of Allied relating to the proposed acquisition of the company by Saga Group.

The firm’s investigation will seek to determine, among other things, whether the board breached their fiduciary duties by failing to maximise shareholder value.

National securities firm Faruqi & Faruqi is also investigating the board of directors of Allied Healthcare International for potential breaches of fiduciary duties in connection with the proposed sale.