InforMax has adopted a stockholder rights plan designed to deter an unwanted takeover bid, the company said last week.
“The InforMax board of directors is taking this action to protect all stockholders of the company,” CEO Alex Titomirov said in a statement. “The rights are designed to provide the board with the flexibility and continued ability to determine the future of InforMax and to realize the value of our stockholders’ investment in the company.”
A spokeswoman for the company said the rights plan was not implemented in reaction to a takeover bid.
Under the plan, the company’s board of directors has declared a dividend that will give shareholders rights to preferred stock. The rights plan has a 15 percent trigger, meaning that the rights can be exercised only if a person or group acquires 15 percent or more of InforMax’s common stock.
InforMax of Bethesda, Md., follows several other companies that have enacted such plans as genomics shares have continued to drop. Over the past few months, Orchid BioSciences, Aclara, Large Scale Biology, and Illumina have all adopted such plans amid depressed stock prices.
But Montie Weisenberger, equity research associate at investment bank Adams, Harkness, & Hill of Boston, said there’s “no direct connection” between the plan and falling stock prices at InforMax. “Overall, the shares are undervalued and I think management was wise to put the rights plan in place to protect shareholder value,” Weisenberger said.
Weisenberger noted that the lack of a “dead hand” provision in the plan, which would give the management team and board more power over an acquirer making a hostile bid, is favorable for InforMax shareholders. “It will allow a reasonable bid to take place and to play itself out without legal barriers.”
The rights plan appears to have had no adverse affect on the company’s stock.
InforMax’ share price, which closed at $7.49 on June 6, has recently been climbing back from a 52-week low of $2.85 reached in early May. The share traded at an all-time high of $31.75 in November.