Shares in small-cap biotech Biota have slid after announcing changes to a merger agreement that would leave its shareholders with a larger stake in the new entity, which will have less cash than originally promised.
The Melbourne-based company announced the reverse takeover of the US-listed Nabi Biopharmaceuticals five months ago, saying it would provide access to Nabi’s $US54 million pool of cash.
Biota also said the deal would deliver a cheap and fast entry into the American market, which would better appreciate its $US231 million vaccine agreement with a US government department.
But the company’s strong retail shareholder base was circumspect on the idea of ditching the Australian sharemarket in favour of the Nasdaq. Shares, which were trading at 94 cents before the deal was announced, have been under pressure, falling another 3.5 cents, or 4.9 per cent, today to 68.5 cents.
In new changes designed to compensate Nabi shareholders for the decline in Biota’s shares and to win over Nabi’s dissident shareholder Mangrove Partners, Nabi shareholders will be distributed between $US28 million and $U31 million in cash, via either a dividend or return of capital. This is in addition to $US23 million already returned to shareholders by Nabi, greatly diminishing the cash in the new entity, to be called Biota Pharmaceuticals.
Biota shareholders will end up with between 81.5 per cent and 85.8 per cent of the combined entity, up from the original figure of 74 per cent.
Biota chairman Jim Fox told shareholders today that the Biota board had decided to ‘‘adjust the terms of the merger to endeavour to deliver on the overwhelming support for the merger from Biota shareholders".
"Biota shareholders have demonstrated a 90 per cent support for the merger and will now retain an even greater proportion of the company post-merger and the reduced cash to be provided by Nabi will be at Biota’s prevailing share price and not at any discount. For Biota shareholders these are key advantages and warrant their ongoing support for the merger."
Nabi president Raafat Fahi said: "I am very pleased with the revised terms of the agreement and believe it is in the best interest of Nabi and its stockholders.’’