BIOGUIDE BRIEF: METABOLIC SHAREHOLDERS GET IT RIGHT
December 21st 2008 23:12
Friday December 19, 2008
Daily news on ASX-listed biotechnology companies
* ASX UP, BIOTECHS DOWN: STARPHARMA UP 15%, SUNSHINE DOWN 29%
* BIOGUIDE BRIEF: METABOLIC SHAREHOLDERS GET IT RIGHT
* VIRALYTICS EVATAK ACTIVE AGAINST GASTRIC CANCERS IN MICE
* FLUOROTECHNICS WINS UK CUSTOMER
* TYRIAN TO SUPPLY DIAGNOSTIQS TO BAYER
* ANTEO APPOINTS JAMES HENDERSON CHAIRMAN
* AUSBIOTECH, ABN AMRO, BLUEPRINT ‘LATE STAGE’ SAN FRAN SHOW
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MARC SINATRA’S BIOGUIDE BRIEF: METABOLIC
Metabolic shareholders who voted for the Polynovo merger at the company’s November 27, 2008 annual general meeting should be thanking those who voted it down.
While it may have been an embarrassing meeting described by one observer as “a debacle” and unprecedented for a board to split and a major shareholder to vote down an agreed merger, the result has been a better business deal for Metabolic.
The original deal valued Polynovo at $9.5 million dollars, based on Metabolic’s share price of 3.9 cents on the day the deal was announced last July.
Yesterday, however, Metabolic was able to acquire 60 percent of Polynovo for $3.5 million dollars, implying a value of only $5.8 million for the company. The deal includes an option for Metabolic to invest up to a further $5 million dollars at the same price up to 2013.
If Metabolic is valued on a cash basis rather than share price, the improvement in the deal is not quite as good as illustrated above, but it is still much better than the original deal.
Essentially, what happened is that Polynovo entered into some business deals that were dependent on the cash that would be made available by the merger with Metabolic, such that if the merger were to fall over, Polynovo would be in great amount of difficulty.
Presumably, some astute Metabolic shareholders recognized this and decided to take advantage of the situation.
With limited time for due diligence by other investors, Metabolic remained in the box seat to snare Polynovo and so they did, at a much more attractive price.
This may not have been ‘nice’ business, but it sure was good business. It is also a timely reminder to us all that a deal ain’t done ‘til it’s done.
Metabolic fell 0.4 cents or 13.33 percent to 2.6 cents.
Marc Sinatra
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