Rare Poison Pill Strategy an Oddity Among Premium Price Takeover Bids Flurry

April 26, 2022 -

USA News Group – Prior to the recent takeover bid of Twitter Inc. (NYSE:TWTR), by the world’s wealthiest man, Elon Musk, the term “poison pill” was rarely uttered in the market. A quick glance at Google Trends shows how the term was virtually non-existent in searches until Twitter’s Board of Directors decided on behalf of shareholders to deny a 20% premium over the closing price before Musk’s offer went public, and a 57% premium over the March 7 closing price. Musk’s response to the attempted thwarting has at least been entertaining, with a series of cryptic tweets and publicly teasing a Plan B at a Ted Talk. However, so-called poison pills are quite rare, as premium prices typically yield favorable responses, like those seen in the takeover bids of energy tech developers Petroteq Energy, Inc. (OTC:PQEFF) by Viston United Swiss AG, Australian Ramsay Health Care by a group led by KKR & Co. Inc. (NYSE:KKR), and the $250-million acquisition of Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI) by Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN).

Founder and ex-CEO of Twitter Inc. (NYSE:TWTR) Jack Dorsey has criticized his former company’s Board (which he still sits on) for its response. Dorsey has been open of his plans to leave the board once his term expires at this year’s shareholders meeting, which is scheduled for late May.

On the Twitter platform itself, Dorsey replied to a user describing the “plots and coups” that played out early on in the history of Twitter’s board, stating “it’s consistently been the dysfunction of the company.”

In another instance, Dorsey responded to a separate tweet in the same thread, which quoted venture capitalist Fred Destin citing what he called a “Silicon Valley proverb”: “Good boards don’t create good companies, but a bad board will kill a company every time.”

Dorsey’s response?: “big facts.”

Now that Twitter has adopted the poison pill model, shareholders of the company currently await Musk’s next move.

Unlike Twitter’s frosty response to Musk, the Board, Management and Largest Shareholders of Petroteq Energy, Inc. (OTC:PQEFF), developers of the proprietary Clean Oil Recovery Technology (CORT), have been publicly positive towards the takeover attempt by clean technologies investment firm Viston United Swiss AG.

In this case, the C$0.195 per share offer when it was first submitted represented a 1,032% premium over the TSX-V volume-weighted average price of $0.065 per common share for the 52-week period preceding April 15, 2021—the last trading day prior to the publication of the voluntary purchase offer in Germany.

Prior to the previous April 14th deadline, a growing number of prominent shareholders signalled their openness to tendering their shares, including unanimous intention to tender shares from the Board of Directors, Petroteq’s Founder, Former Chairman and CEO Alex Blyumkin, and one of the company’s largest shareholders, Cantone Asset Management, LLC, which hold and have tendered approximately 120,000,000 shares of the Petroteq’s common stock.

Now another extension has been agreed upon that now gives a deadline of June 17, 2022.

“Over the past 10 years, I have put all my time, energy and fortune into developing an environmentally friendly technology for water-free and emission-free oil production,” said Blyumkin, who announced his intention to donate half of his profit towards humanitarian purposes in his home country. “It is no coincidence that in this phase we received a takeover offer which, although I believe it is well below the potential value of the company, will provide certainty and immediate liquidity to the nearly 10,000 shareholders and open up new prospects for the company.”

At C$0.74 (US$0.59) per common share, Viston’s offer gave Petroteq a valuation of 279% over the closing price of C$0.195 on the TSX-V August 6, 2021—the day prior to the Canadian exchange’s cease trade order began.

For many months, shares of Petroteq on the Canadian Exchange have ceased trading. However, in the USA, investors can continue to trade shares under the OTC symbol PQEFF, in a form of merger arbitrage trading.

Shares of PQEFF continue to trading at ~US$0.32 as of April 20, 2022. This means there’s still a near 85.5% premium left available for those who follow through offering their shares to the buyer through the official takeover offer website PetroTeqoffer.com.

In the case of Ramsay Health Care, the company’s largest shareholder also supports a takeover offer from a group being led by KKR & Co. Inc. (NYSE:KKR). According to a report from Reuters, the Paul Ramsay Foundation holds an 18.8% stake in the company, and is in favor of the near-$15 billion bid from KKR.

Shares of the Australian company went up by as much as 30% upon news of the KKR buyout attempt. If successful, the takeover would rank as the biggest private equity-backed buyout of an Australian company, and would be the biggest deal in Australia this year.

"The 31.3% premium to Ramsay's price over the last six months is reasonable for a change of control," said Brian Freitas, an analyst who publishes on research platform Smartkarma.

"The share offer implies a forward earnings multiple of 33x versus an average of 17x for its peers, so shareholders should be fine with the proposed offer price."

Another premium-price bid underway is the attempted acquisition of Checkmate Pharmaceuticals, Inc. (NASDAQ:CMPI) by Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN).

In an official statement Regeneron said the companies came to a definitive agreement for a ~$250 million all-cash acquisition that strengthens the company’s portfolio of diverse and combinable immune-oncology candidates.

The merger agreement provides for Regeneron, through a subsidiary, to initiate a tender offer to acquire all outstanding shares of Checkmate at an all-cash price of $10.50 per share of Checkmate common stock—representing a more than 335% premium over the April 18, 2022 closing share price of $2.41 and a ~420% premium over its January 26th price of $2.02.

The result of the announcement was an instant surge for Checkmate shares, which rose 329% on the first day of trading.

Upon the successful completion of the tender offer, Regeneron will acquire all shares not acquired in the tender through a second-step merger. The transaction is expected to close in mid-2022.

Article Source: https://usanewsgroup.com/2022/03/25/this-quick-turnaround-takeover-is-the-kind-of-play-smart-investors-snap-up-in-a-heartbeat


Nothing in this publication should be considered as personalized financial advice. We are not licensed under securities laws to address your particular financial situation. No communication by our employees to you should be deemed as personalized financial advice. Please consult a licensed financial advisor before making any investment decision. This is a paid advertisement and is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. USA News Group is a wholly-owned subsidiary of Market IQ Media Group, Inc. ("MIQ"). MIQ has been paid a fee for PetroTeq Energy Inc. advertising and digital media from Maynard Communication Limited. There may be 3rd parties who may have shares of PetroTeq Energy Inc., and may liquidate their shares which could have a negative effect on the price of the stock. This compensation constitutes a conflict of interest as to our ability to remain objective in our communication regarding the profiled company. Because of this conflict, individuals are strongly encouraged to not use this publication as the basis for any investment decision. The owner/operator of MIQ owns shares of PetroTeq Energy Inc. which were purchased in the open market at least 72 hours after our initial coverage date of the company. MIQ reserves the right to buy and sell, and will buy and sell shares of PetroTeq Energy Inc. at any time thereafter without any further notice. We also expect further compensation as an ongoing digital media effort to increase visibility for the company, no further notice will be given, but let this disclaimer serve as notice that all material disseminated by MIQ on/about PetroTeq Energy Inc. has been reviewed and approved by the principals at PetroTeq Energy Inc.; this is a paid advertisement, and while we we do own shares of PetroTeq Energy Inc. that were purchased in the open market, we plan on buying and selling more shares of PetroTeq Energy Inc. in the open market. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.