Icagen plan would hinder any takeover try
Published: Thu, Dec. 04, 2008 12:30AM
Modified Thu, Dec. 04, 2008 05:50AM
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closeIcagen, a Durham drug-development company under pressure from an activist investor because of its sagging stock price, has adopted a shareholder rights plan that would help block an unsolicited takeover proposal.
The plan, also known as a "poison pill," makes a hostile acquisition prohibitively expensive. It would be triggered if an investor acquires 15 percent or more of Icagen shares. Pfizer, which already owns 18 percent of Icagen, would trigger the plan if it acquires a 20 percent stake.
The rights plan "was not adopted in response to any specific effort to acquire control of the company," Icagen said in a statement Wednesday. "The plan is intended to safeguard against coercive tactics. ... The rights plan is also designed to enhance the company's ability to negotiate with a prospective acquirer."
POISON PILL
Icagen adopted a shareholder rights plan, also known as a poison pill -- a nickname taken from a spy tactic designed to avoid having information fall into enemy hands.
The plan is a common anti-takeover strategy for publicly traded companies. Under Icagen's plan, if a hostile acquirer buys 15 percent of the company's outstanding shares, all shareholders except the potential buyer are allowed to purchase preferred stock at a steep discount. The poison pill dilutes the equity ownership of the hostile party, and is intended to make the takeover so expensive that any attempt to take control will be abandoned.
In Icagen's case, existing shareholders would get rights to purchase $15 worth of Icagen common stock for $7.50.
ALAN M. WOLF
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The move follows an effort by Xmark Opportunity Partners, which owns an 8.6 percent stake in Icagen, to encourage the company's management to boost shareholder value by selling the company.
Xmark wrote to Icagen's board Nov. 29 urging the company to find a buyer. The letter was included in a Securities and Exchange Commission filing this week. Xmark also wrote that it might seek the removal of Icagen's co-founder and CEO, P. Kay Wagoner, if action isn't taken.
In a statement, Wagoner said Icagen's management remains focused on boosting the stock price.
"We believe that Icagen's currently depressed share price does not reflect the intrinsic value of the company," Wagoner said. "We believe it is both necessary and appropriate to take measures to protect all of our shareholders from potential actions designed to deprive our shareholders from realizing the full and fair value of their investment."
Shares of Icagen, which began trading publicly at $8 each in February 2005, rose 2 cents to 63 cents Wednesday.
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