Biotechnology company Progen has been forced to dump its plans to merge with fellow life sciences company Avexa after a group of rebel shareholders scuttled the deal. A group of investors, known as the Progen Shareholder Group and led by biotech entrepreneur Bob Moses, were unhappy with the proposed terms of the Avexa merger, which would have seen $20 million returned to Progen shareholders via a share buyback.
The rebel group wanted more cash returned to shareholders and were backing a rival proposal from a third biotechnology company Cytopia, which wanted to get rid of the Progen board and increase the amount of cash returned to shareholders.
The rebel shareholders appear to have got their way. After announcing the merger plan had been ditched, Progen chief executive Justus Homburg announced a $40 million share buyback aimed at placating the rebels.
He said he was extremely disappointed that the company had to dump the merger.
"Unfortunately, we have a voting block of shareholders that are not interested in holding biotechnology shares and instead would like to see their investment realised via a cash return as soon as possible."
Avexa chief executive Julian Chick was also disappointed. Fears have been raised about the future of the company, given the company appears set to run out of cash in the second half of the year.
But Chick says the company is "not dead by any stretch of the imagination" and Avexa remains in discussions with potential partners.
Related stories:
- Biotechnology companies set to disappear as cash runs out
- Ventracor warns it may fall into administration
- Merger creates leading Australian biotech
