Allegra Medical Technologies Recommends Acceptance of Allegra Innovations' Takeover Bid
AMT (AMT) Share Update July 2024 Thursday 4th
Allegra Medical Technologies Recommends Shareholders Accept Takeover Bid
Allegra Medical Technologies Limited (ASX: AMT) has issued a Target's Statement in response to an off-market takeover bid from Allegra Innovations Pty Ltd, advising shareholders to accept the offer.
Instant Summary:
- Allegra Innovations offers $0.004 cash per AMT share.
- Independent Expert Report deems the offer fair and reasonable.
- AMT's board of independent directors unanimously recommends acceptance.
- Target's Statement includes detailed financial analysis and expert opinions.
- Offer scheduled to close on 22 July 2024.
Background and Offer Details
On 4 July 2024, Allegra Medical Technologies Limited (AMT) issued a Target's Statement in response to an off-market takeover bid from Allegra Innovations Pty Ltd (AI). Allegra Innovations is offering $0.004 cash per AMT share, a proposal that has been deemed fair and reasonable by an Independent Expert Report prepared by Stantons Corporate Finance Pty Ltd.
The Target's Statement outlines the unanimous recommendation from AMT's independent directors for shareholders to accept the offer, in the absence of a superior proposal. The statement has been lodged with the Australian Securities and Investments Commission (ASIC) and sent to all AMT shareholders.
Reasons for Recommendation
The independent directors of AMT have provided several reasons for their recommendation:
- Current financial position of AMT, including reliance on cash reserves and loans.
- Challenges in securing new debt or equity to fund ongoing operations and FDA approval for the Spinal Cage Device.
- Independent Expert's conclusion that the offer is fair and reasonable.
- Risks associated with remaining a minority shareholder if the offer is not accepted.
Financial and Operational Context
AMT has been facing financial challenges, including limited cash reserves and substantial debts. The company has also been unable to secure new funding to support its operations and the FDA approval process for its Spinal Cage Device. The Independent Expert's Report highlights these financial difficulties and supports the recommendation to accept the offer.
AMT's primary product, the Spinal Cage Device, requires FDA approval, which involves significant costs and time. The estimated cost for the necessary testing and activities is approximately $1.34 million, with an expected timeframe of 3.5 years. Given these challenges, the independent directors believe that accepting the offer is in the best interest of shareholders.
Impact on Shareholders
Shareholders who accept the offer will receive $0.004 per AMT share, providing immediate liquidity. Those who do not accept may face risks associated with remaining a minority shareholder, including reduced liquidity and potential delisting from the ASX.
Allegra Innovations has indicated its intention to proceed with compulsory acquisition if it acquires a relevant interest in 90% or more of AMT shares. This would result in the remaining shareholders being forced to sell their shares at the offer price.
Next Steps for Shareholders
AMT shareholders are encouraged to read the Target's Statement in its entirety and consider seeking independent legal, financial, and taxation advice. The offer is scheduled to close on 22 July 2024, and shareholders should act promptly to ensure their acceptance is received before the deadline.
The acceptance of the takeover bid by Allegra Innovations is likely to provide immediate liquidity to AMT shareholders, which is particularly beneficial given the company's current financial challenges. The recommendation from the independent directors and the positive assessment from the Independent Expert Report are expected to bolster investor confidence in the fairness of the offer.
However, shareholders who do not accept the offer may face significant risks, including reduced liquidity and the potential for AMT shares to remain in suspension or be delisted from the ASX. The financial difficulties faced by AMT and the challenges in securing new funding further underscore the rationale behind the recommendation to accept the offer.
Investor Reaction:
Analysts and investors have noted the thorough financial analysis and the Independent Expert's positive assessment as key factors supporting the acceptance of the offer. The immediate liquidity provided by the offer is seen as a significant advantage for shareholders, given AMT's current financial situation and the uncertainties surrounding the FDA approval process for its Spinal Cage Device.
Conclusion:
Investors are advised to carefully review the Target's Statement and consider the independent directors' recommendation to accept the takeover bid from Allegra Innovations. The offer provides immediate liquidity and is supported by a thorough financial analysis and an Independent Expert's Report deeming it fair and reasonable. Shareholders should act promptly to ensure their acceptance is received before the offer closes on 22 July 2024.