Nine shareholder suits have been filed against Cetus Corp. andChiron Corp. since the two companies on July 22 announcedtheir plan to merge.
The suits, which seek to enjoin the merger or collect damagesif the merger is completed, name both Emeryville, Calif.,companies, members of their boards of directors and variousofficers. All were filed in Delaware, where Cetus isincorporated. The suits will likely be consolidated, said Cetusspokeswoman Jana Cuiper.
"These kinds of suits are fairly common, and we believe it iswithout merit," said Cuiper.
"There haven't been that many mergers in the biotech industry,but we haven't seen any without challenging lawsuits," saidAmy Berler, an analyst for First Boston Corp. in New York. "Soit's par for the course."
The suits charge that the merger will force Cetus shareholdersto surrender their Cetus stock (NASDAQ:CTUS) "at anunconscionably low exchange ratio." The suits allege that theproposed 2.9 percent premium to Cetus shareholders, based onthe $17.88 closing price of Cetus stock on July 19, is farbelow the 40 percent average premium paid to stockholders inother friendly mergers.
"It's hard to argue that Cetus could get a better deal," Berlersaid. It would be easier to argue that Chiron is overpaying, shesaid. "My question is: Why does Chiron want to get intooncology a little later than other players and with Cetus' thinportfolio?"
"The boards of directors of both companies received fairnessopinions from our financial advisers and voted unanimouslythat the merger was in the best interests of stockholders ofboth companies," said Chiron spokesman Larry Kurtz. "We couldnot have proceeded with a friendly merger had we not thoughtit was in everybody's best interests."
Cetus stock closed unchanged at $15.63 on Wednesday andChiron stock (NASDAQ:CHIR) closed up 50 cents at $54.50.
-- Karen Bernstein BioWorld Staff
(c) 1997 American Health Consultants. All rights reserved.