If for any reason the merger is not completed or the closing of the merger is significantly delayed, the Adaptimmune ADS price and business and results of operations of Adaptimmune, TCR2, and/or the combined company may be adversely affected. In addition, failure to consummate the merger would prevent Adaptimmune shareholders from realizing the anticipated benefits of the merger and would prevent realization of the extension of the cash runway from early 2025 into early 2026. Adaptimmune has incurred, and expects to continue to incur, significant transaction fees, professional service fees, taxes and other costs related to the merger. Further, if the merger agreement is terminated, under certain circumstances Adaptimmune would be required to pay a termination fee equal to $2.4 million.
Lawsuits may in the future be filed against Adaptimmune, TCR2 and members of their respective boards of directors challenging the merger, and an adverse ruling in any such lawsuit may delay or prevent the completion of the merger or result in an award of damages against Adaptimmune.
Transactions such as the merger are frequently subject to litigation or other legal proceedings, including actions alleging that the Adaptimmune Board or TCR2 Board breached their respective fiduciary duties to their respective shareholders and stockholders by entering into the merger agreement, by failing to obtain a greater value in the transaction for their respective shareholders and stockholders, or otherwise. Adaptimmune cannot provide assurance that such litigation or other legal proceedings will not be brought. If litigation or other legal proceedings are in fact brought against Adaptimmune or TCR2, or against the Adaptimmune Board or TCR2 Board, they will defend against it, but might not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on the business, results of operation or financial position of Adaptimmune or the combined company, including through the possible diversion of either company’s resources or distraction of key personnel.
Furthermore, one of the conditions to the completion of the merger is the absence of an order, injunction, judgment, decree or ruling (whether temporary, preliminary or permanent) enacted, promulgated, issued or entered by any governmental authority of competent authority enjoining, restraining, preventing or prohibiting consummation of the merger. As such, if any plaintiffs are successful in obtaining an injunction preventing the consummation of the merger, that injunction may prevent the merger from becoming effective or from becoming effective within the expected time frame.
The merger agreement restricts Adaptimmune’s and TCR2’s ability to pursue alternatives to the merger, however, in specified circumstances, Adaptimmune or TCR2 may terminate the merger agreement to accept a superior proposal.
Under the merger agreement, Adaptimmune and TCR2 have agreed not to (1) take certain actions to solicit proposals relating to alternative business combination transactions or (2) subject to certain exceptions, including the receipt of a “parent superior proposal” or “company superior proposal” (as such terms are defined in the merger agreement), enter into discussions or an agreement concerning, or provide confidential information in connection with, any proposals for alternative business combination transactions. However, in specified circumstances, Adaptimmune or TCR2 may terminate the merger agreement to enter into a definitive agreement with respect to a “parent superior proposal” or “company superior proposal” prior to obtaining approval of the merger from its shareholders or stockholders, as applicable.
Upon termination of the merger agreement in specified circumstances, Adaptimmune or TCR2 would be required to pay a termination fee equal to $2.4 million. Following the payment of the termination fee, the paying party will, other than in certain circumstances, have no further obligation or liabilities to the other party. Such termination would deny Adaptimmune and its shareholders any benefits from the merger and could negatively impact Adaptimmune’s market price.
These provisions could discourage a third party that may have an interest in acquiring all or a significant part of Adaptimmune from considering or proposing that acquisition, even if such third party were prepared to enter into a transaction that is more favorable to Adaptimmune or its shareholders and stockholders than the merger.
If the proposed merger is not completed, Adaptimmune will have incurred substantial costs that may adversely affect Adaptimmune’s financial results.
Adaptimmune has incurred and will continue to incur substantial costs in connection with the proposed merger. These costs are primarily associated with the fees of consultants, attorneys, accountants and financial advisors. In addition, Adaptimmune has diverted significant management resources in an effort to complete the merger and is subject to restrictions contained in the merger agreement on the conduct of their respective businesses during the pendency of the merger.