Northstar
Neuroscience, Inc. (NDAQ: NSTR) shares are up sharply today after a large shareholder
offered to purchase the company. Tang Capital Partners announced its offer to acquire
the company at $2.25 per share in cash today, sending shares more than 22 percent
higher on the day. The announcement was revealed in a Schedule 13D/A filing with the
SEC.
"As Northstar's largest shareholder, holding approximately 18% of Northstar's outstanding
common stock, we have spent considerable time analyzing Northstar and its options.
We strongly believe that the best course of action for Northstar and its shareholders
is for Northstar to be acquired in a transaction that represents a significant premium
to its current market price," said the hedge fund.
"However, the window for consummating any such transaction is limited; if the Board
is to prevent further erosion of Northstar's value, it must act quickly. Accordingly,
this non-binding proposal is contingent on our receipt of a positive response on or
before July 9, 2008 and Northstar entering into a binding definitive merger agreement
on or before July 23, 2008.
"Our proposal provides Northstar shareholders an immediate and certain path to a premium,
all-cash transaction that will eliminate future market risk as well as the risk of
future erosion in value. We believe that the vast majority of other Northstar shareholders
will agree and expect this proposal to be readily approved by them. We encourage Northstar's
Board to work with us to finalize a definitive merger agreement and bring the transaction
to a shareholder vote as quickly as possible.
"We value the input of the Board and management when considering Northstar's strategic
alternatives and have tried on several occasions to have constructive, confidential
discussions with management regarding these alternatives. So far, management has been
unwilling to entertain such discussions except under conditions that would make it
impossible for us to protect the value of our significant investment in Northstar.
We have made this proposal now because of our belief that this is the only remaining
path to protect that investment."
This is great news for shareholders as the buyout price represents a substantial 50%
premium to the going market price before the announcement was made. Whether or not
the company agrees remains to be seen, but it appears that shareholders are bullish
on the prospects at this point. Still, shares are trading substantially below the
buyout premium at just $1.84 per share.
Related Companies
Cyberonics, Inc. (CYBX)
EnteroMedics Inc. (ETRM)
St. Jude Medical, Inc. (STJ)
Medtronic, Inc. (MDT)
Somanetics Corporation (SMTS)
