Sunday, biotechnology company Progen Pharmaceuticals Limited (PGLA), and Melbourne, Victoria-based Australian drug-discovery company Avexa Limited (AVX.AX) said based on decisive Progen shareholders proxy voting results against the merger, Progen and Avexa have agreed to withdraw from the proposed merger between the companies.
Progen said that the general meeting called to consider the Avexa merger, which was scheduled for March 11, has been cancelled and Progen will pay a break fee of A$500 thousands to Avexa. Furthermore, Progen said, the buy back tender for A$20 million, which formed part of the Avexa deal has been withdrawn.
In addition, the Redwood City, California-based Progen offered a voluntary A$40 million share buyback at a price of A$1.10 a share to its shareholders and said it intends to remain a going concern.
Late December 2008, Avexa and Progen entered into an exclusive binding merger agreement implementation agreement. Under the terms of the deal, shareholders of the dual Australian-U.S. listed Progen will hold 56% of the merged entity, and Avexa shareholders will hold the balance 44%, assuming the A$20 million buyback is fully subscribed. Avexa shareholders will get one Progen share for each 12.857 Avexa shares.
For Progen shareholders, the alternative to the Avexa merger is the return of its A$70 million cash under a pledge made by the company's board at its annual general meeting in November following the halt to the development of its key drug PI-88 earlier
Under the capital return plan, shareholders would get A$1.10 per share, compared to A$1.35 in value for the merger proposal. The merger proposal does include a plan to return up to A$20 million of Progen's cash balance to its shareholders in the form of a A$1.10 per share buyback.
PGLA traded last on March 6, at $0.40. The stock has traded between $0.15 and $2.04 during the past year.
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