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Symyx Spurns Certara's $5.75-per-Share Offer Twice in One Week


By Bernadette Toner

This article has been updated from a version posted June 21 to include information about Certara's latest revised offer and the settlement of a class-action suit filed by Symyx shareholders.

The board of directors of Symyx Technologies has twice this week rebuffed offers from Certara to acquire the firm for $5.75 per share in cash.

In addition, Symyx disclosed in filings with the US Securities and Exchange Commission this week that it has entered a memorandum of understanding to settle a class action suit filed by several of its shareholders regarding its impending merger agreement with Accelrys.

On Wednesday, Certara — the parent firm of Tripos International and Pharsight — revised an offer made last week to buy Symyx for $5.75 per share, or approximately $200 million (BI 6/18/2010). The new offer maintained the same offer price, but addressed Symyx's concerns regarding certainty of closure.

Symyx on Monday dismissed the initial $5.75 per share offer as not "superior" to the merger agreement that Symyx signed with Accelrys in early April. On Friday, the Symyx board said that the latest proposal "continues to be financially inadequate." In addition, the company said that there remain "a number of material issues" regarding the certainty of closure of the proposed merger agreement.

The Symyx board also twice this week "reaffirmed" its commitment to the Accelrys agreement and recommended that Symyx stockholders vote for the merger at a special meeting scheduled for June 30. In addition, two independent proxy advisory firms, Proxy Governance and RiskMetrics, recommended that Symyx shareholders vote in favor of the Accelrys merger.

Under the terms of the merger with Accelrys, Symyx stockholders would receive 0.7802 of a share of Accelrys common stock for each share of Symyx they own. Following the completion of the merger, Accelrys and Symyx stockholders will each own approximately 50 percent of the combined company (BI 4/9/2010).

Based on Accelrys's closing share price of $6.78 on Thursday, the deal would price Symyx at $5.29 per share, with a total value of $185 million.

Symyx shares closed at $5.57 on Thursday and the company's market cap was $194 million.

The latest offer from Certara still valued Symyx at $200 million, but was "irrevocable, effective immediately," while the previous proposal would have only been binding for the 24-hour period after Symyx shareholders either failed to approve the Accelrys agreement or decide to terminate the agreement.

In a letter sent to the Symyx board this week, Certara said that the $5.75-per-share offer still "represents a substantial premium to the implied value of the Accelrys merger," and added that the fact that Symyx shares are trading at a premium to the implied value of the Accelrys merger "clearly demonstrates that your stockholders prefer our all-cash deal."

These arguments did not convince the Symyx board, however, which snubbed the company yet again following two weeks of public deliberations between the firms, during which Symyx first terminated discussions with the Certara after it revoked an initial proposal of $6.75 per share, and then decided to review the two proposals from Symyx for $5.75 per share.

In a proxy statement sent to shareholders in May and updated this week, Symyx disclosed that it had actually rejected numerous previous overtures from Certara, beginning with an initial offer of $6.00 per share on April 7, two subsequent proposals at $6.25 per share, and then an offer on May 24 for $6.75 per share — a price tag that enticed the firm into entering due diligence discussions with Certara. Those talks were terminated earlier this month when Certara informed Symyx on June 14 that it would not be able to offer a transaction at $6.75 per share.

Shareholder Strife

Not all of Symyx's shareholders are convinced that the Accelrys offer presents a better deal. Richard Rofe, managing director of Symyx shareholder Arcadia Capital Advisors, told BioInform this week that Symyx's cash offer is preferable to the Accelrys stock-for-stock agreement.

Last month, Arcadia announced that it did not plan to support the Accelrys merger because the board had rejected several all-cash bids from competing parties. At the time, Rofe said that Arcadia was "concerned that the board has not focused on maximizing shareholder value by brazenly rejecting any and all competing proposals to date" (BI 5/28/2010).

Arcadia holds less than 5 percent of Symyx's outstanding shares.

In addition, Symyx's updated proxy statement, filed on Thursday with the SEC, disclosed that the company on June 22 entered into a memorandum of understanding to settle a class-action suit that had been filed against Symyx, its board of directors, certain executive officers, and Accelrys.

The company said that several Symyx stockholders in early April filed individual suits, which were ultimately combined on May 20 into a single consolidated complaint in the Superior Court of the State of California, County of Santa Clara. The consolidated complaint alleges, among other things, "that Symyx’s directors breached their fiduciary duties to the stockholders of Symyx in connection with the proposed merger, and seeks, among other things, to enjoin the defendants from completing the merger pursuant to the terms of the merger agreement," Symyx said in its proxy statement.

Symyx said that it believes the complaint is "entirely without merit," but decided to enter into the MOU to settle the suit "in an effort to minimize the cost and expense of any litigation relating to such complaint."

The MOU "provides a release and settlement by the purported class of Symyx stockholders with prejudice of all asserted claims against the defendants and without costs to any defendant (other than as expressly provided in the MOU) in connection with the merger," Symyx said. "None of Symyx, Accelrys or any of the other defendants has admitted wrongdoing of any kind, including but not limited to inadequacies in any disclosure, the materiality of any disclosure that the plaintiffs contend should have been made, any breach of any fiduciary duty, or aiding or abetting any of the foregoing."

Symyx said that it and the plaintiffs in the case will present to the court a "stipulation of settlement" that will include "a release of all claims against all defendants and their affiliates and agents held by the plaintiffs and class members."

The company said it "anticipates" that the plaintiffs will ask the court for an award of attorneys’ fees and expenses, and that while it intends to contest the amounts sought, it will ultimately be obligated by the court to pay. "These attorneys’ fees and expenses will not be deducted from the consideration payable to the Symyx stockholders in connection with and upon completion of the merger," Symyx said.

Furthermore, if the settlement is not approved by the court, "Symyx, Accelrys and all of the other defendants will continue to vigorously defend this action."