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After Symyx Terminates Acquisition Discussions, Certara Submits Proposal for $5.75 per Share

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This article has been updated from a version originally posted June 14 to reflect Symyx's decision to end the discussions with Certara and Certara's subsequent revised proposal.

Symyx Technologies said this week that it has received a formal acquisition proposal from Certara, the parent company of Tripos International and Pharsight, for $5.75 per share, which places the firm's total value at around $200 million.

Certara and its private equity backer Vector Capital submitted the offer after Symyx ended merger discussions with Certara earlier in the week because it had revoked an initial proposal to purchase Symyx for $6.75 per share, or a total value of $235.5 million.

The new offer comes as Symyx prepares to finalize its previously disclosed merger with Accelrys, under which Symyx stockholders would receive 0.7802 shares of Accelrys common stock for each share of Symyx they own. Based on Accelrys's share price of $6.55 on June 17, that agreement values Symyx at $178 million.

Symyx shareholders are scheduled to vote on the Accelrys offer on June 30.

Symyx said in a statement this week that its board will review the revised Certara/Vector proposal, but is "not making any recommendation at this time with respect to the Certara/Vector proposal and is not withdrawing, amending, qualifying or modifying its recommendation with respect to the Accelrys agreement."

The day after Symyx disclosed the revised proposal, Certara accused Symyx of omitting "material information" about the offer from its statement, which led to "substantial confusion in the market regarding the terms of our offer and our intentions."

In response, Certara published the contents of the letter it had sent to Symyx, "so as to correct the confusion in the market."

In addition to the offer price of $5.75 per share, which Certara noted is an 11 percent premium over the value of the Accelrys transaction, the letter disclosed Certara's intention to guarantee the completion of the acquisition if Symyx decides to terminate its agreement with Accelrys.

Specifically, Certara said that its offer will be "irrevocable" for the 24-hour period after Symyx shareholders either fail to approve the Accelrys agreement or decide to terminate the agreement.

"By making our offer irrevocable effective at the moment the Accelrys merger agreement is either rejected or so terminated, we are providing certainty to you and the Symyx stockholders that our proposal will remain in effect at the critical moment when the Accelrys merger agreement is terminated," Certara said. "We therefore have removed any risk that the Accelrys merger agreement is terminated due to your recommendation of our bid without your ability to simultaneously accept our offer on the terms proposed today."

In addition, Certara argued in favor of launching a tender offer "as soon as possible," and preferably before the June 30 stockholder meeting.

"As such, once you notify us that you will change your recommendation with respect to the Accelrys transaction and will recommend in favor of our transaction, we will deliver an executed copy of the enclosed merger agreement and launch our tender offer," the letter states.

Certara's revised offer follows Symyx's disclosure on June 15 that it had terminated discussions with Certara because it "revoked its previous offer to purchase the company for $6.75 per share in cash."

Symyx signed a deal with Certara and Vector on June 4 under which it agreed to provide the firms with confidential information to assist their due diligence investigation.

Under the terms of that agreement, Certara and Vector were slated to submit their "best and final" proposal to Symyx by June 13. This proposal was expected to include "not only an improved price, but also be accompanied by a form of merger agreement and other documents that [would] assure certainty of closure."

Symyx said that Certara advised it on June 13 that it would not be submitting a revised proposal by the requested date. On the following day, Certara CEO Jim Hopkins submitted a letter, but no other documentation, to Symyx. The letter stated that Certara "will not be able to offer a transaction at $6.75 per share."

Hopkins added that Certara remained "convinced that we will be in a position to offer a substantial cash premium to your stockholders relative to the value of the Accelrys deal, and that your stockholders will conclude that our offer is superior."

Nevertheless, Symyx's board met on June 15 and determined that Certara had revoked its previous offer to purchase the company for $6.75 per share and that it was unlikely that further talks with Certara would lead to a "superior proposal."

Certara "clearly stated it will not offer a transaction at or above the price previously proposed, and has neither made an alternative proposal nor provided the Company with updated documentation that assures the level of certainty to closure necessary to protect the Company’s stockholders," Symyx said.

Symyx last month disclosed that it had received several competing merger offers, with one party referred to as "the competitor" bidding $6.75 per share, but did not reveal the identity of the suitors at the time (BioInform 5/28/2010).

In SEC documents filed last week, Symyx confirmed that "the competitor" was Certara and that it signed an agreement on June 4 to review the proposal. Certara was formed in 2008 after Tripos acquired Pharsight.

Despite the negotiations with Certara, Symyx has continued to carry out its integration planning with Accelrys.

In an e-mail to Symyx employees dated June 8, Symyx CEO Isy Goldwasser said that despite the new offer, the schedule and activities related to the proposed merger "remain unchanged and continue to advance towards our shareholder vote on June 30."

Accelrys CEO Max Carnecchia sent a similar e-mail to Accelrys employees on June 13 that acknowledged the competing offer but noted that "the timeline relating to our potential combination remains largely unchanged."

Carnecchia added that Accelrys and Symyx have made "solid progress" in integration planning over the last several weeks. Specifically, he said that they have completed "joint functional reviews with every area of our business resulting in draft organizational designs, risk and opportunity assessments, and synergy potentials for the combined business."

In his e-mail, Symyx's Goldwasser said that through the end of June, "detailed plans moving past organizational design to organizational structures and specific personnel assignments will take place," while a final integration plan should be ready "after favorable shareholder votes and the subsequent closing of the merger."

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