Kezar Board Unanimously Rejects Unsolicited Concentra Proposal and Adopts Limited Duration Stockholder Rights Plan
Kezar Life Sciences (Nasdaq: KZR) has unanimously rejected an unsolicited proposal from Concentra Biosciences to acquire all outstanding shares for $1.10 per share plus a contingent value right. The Board concluded that the offer substantially undervalues the company and fails to reflect the potential of zetomipzomib. In response to Concentra's rapid accumulation of 9.9% of Kezar's stock, the Board has adopted a duration stockholder rights plan.
The Rights Plan aims to protect stockholders' long-term value and reduce the likelihood of control gain through open market accumulation without paying an appropriate premium. It allows one preferred share purchase right for each outstanding common share as of October 28, 2024. Rights become exercisable if an entity acquires 10% or more of Kezar's stock (15% for passive institutional investors). The plan expires on October 17, 2025, unless redeemed or exchanged earlier.
- Board's unanimous rejection of undervalued acquisition offer protects shareholder interests
- Adoption of stockholder rights plan to prevent hostile takeover attempts
- Rights Plan allows Board flexibility to engage with potential acquirers if in best interest of shareholders
- Rapid accumulation of 9.9% of company stock by Concentra Biosciences
- Significant and ongoing dislocation in KZR stock trading price
- Potential dilution of existing shareholders if Rights Plan is triggered
Insights
The Board's rejection of Concentra's unsolicited offer and adoption of a stockholder rights plan are significant defensive moves. The
The rights plan, often called a "poison pill," is designed to prevent hostile takeovers by making them prohibitively expensive. It's triggered if any entity acquires
Notably, Concentra has already accumulated a
Kezar's rejection of the Concentra offer highlights the ongoing challenge of valuing clinical-stage biotech companies. With a market cap of about
The focus on zetomipzomib as a key value driver is crucial. This compound, targeting immune-mediated diseases, represents the company's main value proposition. The Board's confidence suggests promising data or partnering opportunities that aren't fully reflected in the public valuation.
However, the adoption of a rights plan could be seen as a double-edged sword by investors. While it protects against undervalued takeovers, it might also limit near-term upside potential from acquisition premiums. The key for investors will be watching for catalysts that could validate the Board's valuation stance, such as clinical trial results or partnership announcements for zetomipzomib.
After careful consideration and with the assistance of its independent financial and legal advisors, the Board unanimously concluded that the Concentra proposal substantially undervalues the Company. The proposal would result in an implied equity value for Kezar stockholders that is materially below Kezar’s available liquidity and fails to provide adequate value to reflect the significant potential of zetomipzomib as a therapeutic candidate. Accordingly, the Board determined that the proposal is not in the best interests of Kezar and its stockholders. In addition, in response to Concentra’s proposal and Concentra and its affiliates’ rapid accumulation of
“Kezar continues to experience a significant and ongoing dislocation in the trading price of its common stock which does not reflect its fundamental value,” said Graham Cooper, Chairman of the Board. “We intend the Rights Plan to enable all of our stockholders to realize the long-term value of their investment. The Rights Plan should reduce the likelihood that any person or group gains control of Kezar through open market accumulation without paying all stockholders an appropriate control premium or without providing the Board sufficient time to make informed judgments and take actions that are in the best interests of all stockholders.”
The Rights Plan does not prevent the Board from engaging with parties or accepting an acquisition proposal, including from Concentra, if the Board believes that it is in the best interests of Kezar and all of its stockholders. The Rights Plan is similar to other plans adopted by publicly held companies in comparable circumstances, and does not contain any dead-hand, slow-hand, no-hand or similar feature that limits the ability of a future Board to redeem the rights.
In connection with the adoption of the Rights Plan, the Board declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of Kezar’s common stock as of the close of business on October 28, 2024, the record date. The Rights will be exercisable only if a person or group (an “Acquiring Person”) acquires or launches a tender or exchange offer to acquire beneficial ownership (which includes certain synthetic equity interests) of
The Rights Plan will expire on October 17, 2025, unless the Rights are earlier redeemed or exchanged by Kezar.
Kezar stockholders do not need to take any further action at this time.
Additional information regarding the Rights Plan will be contained in a Form 8-K to be filed by Kezar with the
About Kezar Life Sciences
Kezar Life Sciences is a clinical-stage biopharmaceutical company developing novel small molecule therapeutics to treat unmet needs in immune-mediated diseases. For more information, visit www.kezarlifesciences.com, and follow us on LinkedIn, Facebook, Twitter and Instagram.
Cautionary Note on Forward-looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “can,” “should,” “expect,” “believe,” “potential,” “anticipate” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements. These forward-looking statements are based on Kezar’s expectations and assumptions as of the date of this press release. Each of these forward-looking statements involves risks and uncertainties that could cause Kezar’s future results or performance to differ materially from those expressed or implied by the forward-looking statements. There can be no assurance that the non-binding proposal or any other acquisition proposal will result in a formal offer or that any such offer will ultimately result in a completed transaction. Many factors may cause differences between current expectations and actual results, including those factors that are discussed in Kezar’s filings with the
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Investor and Media Contact:
Gitanjali Jain
Senior Vice President, Investor Relations and External Affairs
Kezar Life Sciences, Inc.
gjain@kezarbio.com
Source: Kezar Life Sciences
FAQ
What was the offer price in Concentra's proposal to acquire Kezar Life Sciences (KZR)?
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