Investor Group Reiterates Intent to Vote AGAINST Sesen Bio’s Value-Destructive Merger with Carisma
03 Gennaio 2023 - 2:00PM
Business Wire
Proposes Alternative to the Merger That
Would Deliver Superior Value for Sesen Bio’s Stockholders
Questions the Sesen Bio Board’s Resistance
to Obtaining a New Fairness Opinion for Carisma Now That Comparable
Companies Have Declined 30%-60% Since the Merger
Announcement
Bradley L. Radoff and Michael Torok (together with their
affiliates, the “Investor Group” or “we”), who own approximately
8.4% of the outstanding common stock of Sesen Bio, Inc. (Nasdaq:
SESN) (“Sesen Bio” or the “Company”), today reiterated their intent
to vote AGAINST the Company’s
proposed merger with Carisma Therapeutics Inc. (“Carisma”) through
the following statement:
“After reviewing the amended merger terms disclosed last week,
the Investor Group remains firmly opposed to what we deem an
illogical, value-destructive transaction. We contend that Sesen
Bio’s stockholders would be far better off if the merger was
terminated and the Company’s approximately $140 million in cash was
efficiently returned to investors along with the contemplated
contingent value right (“CVR”) instrument. We estimate the cash
available to return to the Company’s stockholders would translate
to at least $0.70 per share – representing an approximately 15%
premium to where the Company’s stock currently trades against the
backdrop of the flawed merger. The Company’s stockholders could
receive additional upside value from the CVR.
In our view, Sesen Bio has placed an absurdly high value on
Carisma despite the fact that valuations across the early-stage
biotech sector have been resetting. We fear this egregious misstep
reflects Sesen Bio’s Board of Directors (the “Board”) having
minimal stockholdings, insufficient capital allocation and
transaction expertise, and weak public company governance
experience. At this point, the Board appears to be either unable or
unwilling to act in stockholders’ best interests.
We believe the December 29, 2022 amendment to the merger
agreement does not adequately return value to Sesen Bio’s
stockholders. We have consistently advocated for terminating the
merger in favor of returning cash and a CVR to the Company’s
stockholders in a value-maximizing manner. Given that Sesen Bio’s
stock price rose more than 20% after the amended terms were
disclosed, we suspect there would be an even larger bump if the
deal were scrapped altogether. When asked by the Company what it
would take for us to support the merger, we have consistently
indicated the following terms:
- A $100 million cash dividend.
- A CVR that covers all of the Company’s legacy assets.
- An updated fairness opinion, which we expect will reflect a
lower valuation for Carisma.
The Investor Group believes it is critically important for the
Board to obtain an updated fairness opinion given that the
comparable companies cited in the original fairness opinion have
decreased in value by approximately 30% to 60% since the Carisma
merger was announced. To date, despite the Board squandering a
massive amount of capital on external advisors, there has been a
concerning level of resistance to obtaining an updated fairness
opinion and ensuring stockholders have the most current information
to inform their voting decision. We reserve all of our rights with
respect to the Board’s handling of this transaction if it proceeds
down its perilous path.”
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version on businesswire.com: https://www.businesswire.com/news/home/20230103005207/en/
Longacre Square Partners Greg Marose, 646-386-0091
gmarose@longacresquare.com
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