NEW YORK, March 27 - CuraGen on Thursday said it has put in place a stockholder rights plan it hopes will protect its "long-term interests" in case of an unsolicited takeover attempt.
The company stressed, however, that the move was not in response to any current unsolicited takeover attempt.
Under the plan, owners of CuraGen common stock as of April 10 will get one right for each share they hold. Each right allows shareholders to buy 1/100th of a share of junior participating preferred stock at cost of $150 for each 1/100th of a preferred share.
"The rights will become exercisable and will detach from the common stock a specified period of time after any person has become the beneficial owner of 20 percent or more of CuraGen's outstanding common stock or has commenced a tender or exchange offer which, if consummated, would result in such person becoming the beneficial owner of 20 percent or more of CuraGen's outstanding common stock," CuraGen said.
If any one person gets hold of 20 percent or more of CuraGen's outstanding common stock, or if the company gets tied up "in certain mergers or other business combinations" or sells more than half of its assets, rights holders will be allowed to buy CuraGen common stock at a 50-percent discount to whatever the stock happens to be trading at the moment, according to CuraGen.
Mark Vincent, a CuraGen spokesperson, said the move is "the effect of a deflated stock price" and has been in the works "for a while."
"The overall market has been unkind to a number of companies," said Vincent of the current climate of consolidation. "If you look at our market cap--at about [$750 million] right now, and we've got about $500 million in cash and our rapidly growing pipeline--we are significantly undervalued."
Shares of CuraGen closed at $15.83 on the Nasdaq on Wednesday, considerably below their 52-week high of $41.34 but only slightly above their 52-week low of $13.87.
Other publicly held genomics firms to adopt similar rights plans include Orchid, Millennium, Myriad Genetics, Invitrogen, Illumina, and Human Genome Sciences.