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Arana - Shareholder Update - Bid from Cephalon
10 / 03 / 2009
Dear Arana Shareholder,
I am writing to you to ensure you are up to date with several important developments for Arana Therapeutics Limited ("Arana").
As you may already be aware, on 27 February 2009 Cephalon, Inc. (Nasdaq: CEPH) announced that its wholly-owned subsidiary, Cephalon International Holdings, Inc. ("Cephalon") intends to make a cash takeover offer for all of the shares in Arana which it does not already own at a minimum price of $1.40 per share ("Cephalon Offer"). Should Cephalon obtain a relevant interest in 90% of Arana shares (ie the threshold for compulsory acquisition) and the offer conditions are satisfied or waived, then Cephalon will increase the consideration payable under the offer to $1.45 per share ("Increased Cash Offer").
On 2 March 2009, the Directors of Arana declared a 5 cent fully franked special dividend payable to all shareholders of Arana with a record date of 30 March 2009. Cephalon's Offer of $1.40 is cum dividend. Accordingly, the amount of the dividend will be set off against the offer price (reducing it to $1.35) once Arana's shares go ex dividend on 24 March 2009.
The Independent Directors unanimously recommend that Arana shareholders accept the Cephalon Offer, in the absence of a superior proposal. Key reasons for this recommendation include:
1. Substantial Premium - The Cephalon Offer represents a very substantial premium for Arana shareholders. In particular, it represents:
Minimum Cash Offer a 68.7% premium to the closing share price on Wednesday 25 February 2009, being the date prior to Arana entering a trading halt in relation to the announcement of the Cephalon Offer; and
Increased Cash Offer a 74.7% premium to the closing share price on Wednesday 25 February 2009, being the date prior to Arana entering a trading halt in relation to the announcement of the Cephalon Offer
On the business day prior to Cephalon announcing their intention to make a takeover offer for Arana, the Arana share price closed at $0.83. Since announcement of the Cephalon Offer, the Arana share price has traded between a low of $1.36 and a high of $1.435.
2. Increase in Price if Cephalon Offer Achieves 90% Acceptance - Cephalon has further announced that should it obtain a relevant interest in 90% of Arana shares (ie the threshold for compulsory acquisition) and the offer conditions are satisfied or waived, the Cephalon Offer consideration will be increased to $1.40 per share (ex dividend), or $1.45 (cum dividend) (the Increased Cash Offer).
Offer Price
Below 90% Above 90%
Cephalon Offer - BEFORE ex dividend date of 24 March 2009 $1.40 $1.45
Cephalon Offer - AFTER ex dividend date of 24 March 2009 $1.35 $1.40
3. Major Shareholder Support -Prior to announcing the Cephalon Offer, Cephalon entered into agreements to acquire an ownership position in Arana representing approximately 19.8% of Arana's total issued share capital. This position has been acquired from Arana's largest two shareholders, being Start-up Australia Ventures Pty Limited and Rockwell Securities Limited. Start-up Australia Ventures Pty Limited is an entity associated with former Arana Director, Dr George Jessup.
4. Low Conditionality of the Offer - Cephalon's offer is subject to certain minimum conditions, including a 50.1% minimum acceptance condition.
5. Cash Certainty - Valuations of nearly all asset classes have decreased substantially over the past 12 months and the current global financial conditions make it very difficult to value assets with any certainty. In addition the nature of drug development and the lengthy commercialisation process makes any valuation inherently uncertain. The Cephalon Offer provides certainty of value to Arana Shareholders.
6. Directors' Shareholdings - In the absence of a superior proposal, each of the Arana Directors intend to accept the Cephalon Offer in respect of all Arana shares they own or control.
Other important information of which you should be aware includes:
1. Cancellation of Share Buyback and Announcement of 5 cent Special Fully Franke
I am writing to you to ensure you are up to date with several important developments for Arana Therapeutics Limited ("Arana").
As you may already be aware, on 27 February 2009 Cephalon, Inc. (Nasdaq: CEPH) announced that its wholly-owned subsidiary, Cephalon International Holdings, Inc. ("Cephalon") intends to make a cash takeover offer for all of the shares in Arana which it does not already own at a minimum price of $1.40 per share ("Cephalon Offer"). Should Cephalon obtain a relevant interest in 90% of Arana shares (ie the threshold for compulsory acquisition) and the offer conditions are satisfied or waived, then Cephalon will increase the consideration payable under the offer to $1.45 per share ("Increased Cash Offer").
On 2 March 2009, the Directors of Arana declared a 5 cent fully franked special dividend payable to all shareholders of Arana with a record date of 30 March 2009. Cephalon's Offer of $1.40 is cum dividend. Accordingly, the amount of the dividend will be set off against the offer price (reducing it to $1.35) once Arana's shares go ex dividend on 24 March 2009.
The Independent Directors unanimously recommend that Arana shareholders accept the Cephalon Offer, in the absence of a superior proposal. Key reasons for this recommendation include:
1. Substantial Premium - The Cephalon Offer represents a very substantial premium for Arana shareholders. In particular, it represents:
Minimum Cash Offer a 68.7% premium to the closing share price on Wednesday 25 February 2009, being the date prior to Arana entering a trading halt in relation to the announcement of the Cephalon Offer; and
Increased Cash Offer a 74.7% premium to the closing share price on Wednesday 25 February 2009, being the date prior to Arana entering a trading halt in relation to the announcement of the Cephalon Offer
On the business day prior to Cephalon announcing their intention to make a takeover offer for Arana, the Arana share price closed at $0.83. Since announcement of the Cephalon Offer, the Arana share price has traded between a low of $1.36 and a high of $1.435.
2. Increase in Price if Cephalon Offer Achieves 90% Acceptance - Cephalon has further announced that should it obtain a relevant interest in 90% of Arana shares (ie the threshold for compulsory acquisition) and the offer conditions are satisfied or waived, the Cephalon Offer consideration will be increased to $1.40 per share (ex dividend), or $1.45 (cum dividend) (the Increased Cash Offer).
Offer Price
Below 90% Above 90%
Cephalon Offer - BEFORE ex dividend date of 24 March 2009 $1.40 $1.45
Cephalon Offer - AFTER ex dividend date of 24 March 2009 $1.35 $1.40
3. Major Shareholder Support -Prior to announcing the Cephalon Offer, Cephalon entered into agreements to acquire an ownership position in Arana representing approximately 19.8% of Arana's total issued share capital. This position has been acquired from Arana's largest two shareholders, being Start-up Australia Ventures Pty Limited and Rockwell Securities Limited. Start-up Australia Ventures Pty Limited is an entity associated with former Arana Director, Dr George Jessup.
4. Low Conditionality of the Offer - Cephalon's offer is subject to certain minimum conditions, including a 50.1% minimum acceptance condition.
5. Cash Certainty - Valuations of nearly all asset classes have decreased substantially over the past 12 months and the current global financial conditions make it very difficult to value assets with any certainty. In addition the nature of drug development and the lengthy commercialisation process makes any valuation inherently uncertain. The Cephalon Offer provides certainty of value to Arana Shareholders.
6. Directors' Shareholdings - In the absence of a superior proposal, each of the Arana Directors intend to accept the Cephalon Offer in respect of all Arana shares they own or control.
Other important information of which you should be aware includes:
1. Cancellation of Share Buyback and Announcement of 5 cent Special Fully Franke