This story has been updated from a version posted May 26 to include recent disclosures about the competing bid and to update share price information.
The proposed merger between Accelrys and Symyx Technologies may have hit a snag this week as Symyx disclosed that it will "engage in discussions" with an undisclosed firm that has made a competing offer.
According to documents filed this week with the US Securities and Exchange Commission, an undisclosed firm referred to as "the competitor" submitted a revised proposal on May 24 to acquire all of Symyx's stock for $6.75 per share through a two-step cash tender offer followed by a merger.
The offer represents the second time that the competitor has increased its bid for Symyx.
Symyx said that its board met on May 26 to consider the revised proposal and determined that while it "did not constitute a superior offer" in itself, it "would reasonably be expected to result in a superior offer." As a result, Symyx said that it plans to "engage in discussions with the competitor."
The disclosure follows an announcement from Symyx shareholder Arcadia Capital Advisors earlier this week that it did not plan to support the proposed stock-for-stock merger with Accelrys because the board had rejected several all-cash bids from competing parties.
In a statement, Richard Rofe, Arcadia's managing director, said that Arcadia is "concerned that the board has not focused on maximizing shareholder value by brazenly rejecting any and all competing proposals to date."
Arcadia holds less than 5 percent of Symyx's outstanding shares.
The investment firm cited several all-cash bid proposals from two undisclosed parties, which were priced at $6.00 per share and $6.25 per share, as well as the first revised proposal from "the competitor" for $6.50 per share.
Symyx said in an SEC filing that the offer for $6.50 per share, received May 18, was "inadequate, from a financial point of view, considering the price offered in comparison to the terms of the proposed merger with Accelrys and long-term value which that merger could provide to Symyx stockholders, and Symyx’s valuation as a stand-alone company."
Under the terms of the merger with Acclerys, announced in early April, Symyx shareholders will receive 0.7802 shares of Accelrys common stock for each Symyx share (BioInform 4/9/10).
On May 26, Accelrys common stock closed at $6.65 per share, making each share of Symyx worth approximately $5.19 under the terms of the agreement — a 12 percent discount to Symyx's market closing price of $5.92 per share on May 26.
Arcadia noted earlier in the week that that the all-cash offer of $6.50 per share represented a 24 percent premium to the merger-equivalent price and a 10 percent premium Symyx stock price of $5.91 at Tuesday's market close. The $6.75 per share offer would represent a 30 percent premium over the merger-equivalent price and a 12 percent premium over Symyx's closing price on May 26.
"As a long-term Symyx shareholder, we would be more comfortable with the certainty of cash now rather than be dependent upon the execution risk, integration risk, market risk, and other uncertainties in the current economic environment related to any expected long-term value of the Symyx-Accelrys combination," Rofe said.
Arcadia added that it "also questions whether the 50 percent ownership stake in the combined company for Symyx shareholders accurately reflects an acceptable value of Symyx in light of these competing offers, Accelrys' own recent disappointing earnings announcement, and Symyx's significant financial contribution to the combined entity."
Last week, Accelrys reported a 4 percent increase in fourth-quarter revenues accompanied by a wider loss (BioInform 5/21/10).
Arcadia said it asked the Symyx board "to conclude that the latest all-cash proposal is greater than the present 'merger equivalent value' and as a result may lead to a superior proposal." This would then enable one or both interested parties "to commence limited due diligence without triggering a termination event with Accelrys."
Shareholders are scheduled to vote on the proposed merger on June 30.