Kezar Life Sciences (NASDAQ: NASDAQ:KZR) stood firm against a takeover attempt by Concentra Biosciences, LLC.
The board of directors unanimously turned down Concentra's unsolicited proposal to purchase all outstanding Kezar shares for $1.10 each, plus a contingent value right (CVR).
The CVR would entitle shareholders to 80% of net proceeds from any future licensing or sale of Kezar's development programs or intellectual property.
The board believes the offer, which amounts to a total cash value of $80 million, significantly undervalues the company, especially considering Kezar's cash balance was approximately $148 million as of September 30, 2024. In a strategic move to protect shareholder interests, Kezar has implemented a limited duration stockholder rights plan, effective immediately.
This rights plan is designed to deter any potential takeover that does not align with the best interests of Kezar and its shareholders. It allows the board to engage and accept acquisition proposals if deemed favorable, including from Concentra. The plan ensures that no dead-hand, slow-hand, no-hand, or similar features would restrict future boards from redeeming the rights.
As part of the rights plan, Kezar declared a dividend of one preferred share purchase right for each share of common stock held as of October 28, 2024. These rights will become exercisable if an individual or group attempts to acquire a beneficial ownership of 10% or more of Kezar's common stock, or 15% in the case of a passive institutional investor. Current stockholders exceeding this threshold are grandfathered at their present ownership levels, but any further increase could activate the rights plan.
Once exercisable, each right will allow the holder to buy additional Kezar common stock at a value double the exercise price of $7.16. The plan also includes standard flip-over and exchange provisions and is set to expire on October 17, 2025, unless redeemed or exchanged beforehand. H.C. Wainwright maintains a Neutral rating on Kezar Life Sciences, without setting a specific price target.
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