Nabi feels Biota's collar after share slide as merger advances
This article was originally published in Scrip
Nabi Biopharmaceuticals and Biota Holdings have amended the terms of their merger agreement after dissent from Nabi's shareholders stemming from the decline in value of Biota's share price since the merger was announced in April this year (scripintelligence.com, 24 April 2012).
Biota of Australia said it has "taken the decision to adjust the terms of the merger to endeavour to deliver on the overwhelming support for the merger" from its shareholders.
US-based Nabi said it supports the revised terms and, additionally, one of the key opposing Nabi shareholders now intends to support the merger on the new terms.
Under the revised terms, the amount of cash Nabi will contribute to the combined company will be reduced from $54 million to $27 million. All excess cash will be returned to Nabi shareholders.
Biota stockholders will own an increased proportion of the company. However, the amendments include a collar mechanism under which the number of Nabi shares that Biota stockholders will receive is linked to Biota's stock price. Biota stockholders will receive between 81.4% and 85.8% based on its volume-weighted average share price (VWAP) at current exchange rates. Under the previous terms, its stockholders were to own 74% of the merged company.
The reduced amount of cash raised through the transaction is at Biota's existing share price and not at any discount, Biota noted.
Biota's stock price fell from Aus$0.95 on 20 April to Aus$0.86 on 23 April after the merger was announced, bringing its market cap to Aus$150.8 million. It has since slipped further, closing at Aus$0.69 on 18 September.
Nabi traded down $0.20 to close at $1.65 on Nasdaq on 23 April, toward the bottom of its 52-week range of $1.50 to $5.87, giving it a market cap is $70.3 million. Its latest close was at $1.71.
The revised merger, which has been cleared by the boards of both companies, is still subject to Nabi stockholder approval. A date for a vote on the matter has yet to be confirmed.
Mangrove Partners, which owns around 4% of Nabi, had previously opposed the deal. Nabi said that it has now entered into a "support agreement" with Mangrove for the revised transaction.