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Affymetrix Settles Investor Suit to Push Ahead with eBioscience Acquisition


Affymetrix has entered into an agreement to settle an investor lawsuit, which should allow it to proceed with its proposed acquisition of San Diego flow cytometry and immunoassay reagents provider eBioscience.

According to documents filed last week with the US Securities and Exchange Commission, Affy has agreed to settle a suit filed in late December by Tang Capital Partners on behalf of holders of the company's 3.50 Percent Senior Convertible Notes Due 2038 (BAN 1/3/2012).

The settlement of the case should allow Affy to proceed with its proposed acquisition of eBioscience.

Affy announced its intention to buy eBioscience for $350 million in cash and debt in November. The company originally said the deal would close by the end of 2011, but on Dec. 28 delayed the transaction by a month, citing financing arrangements. A week later, after Tang Capital Partners filed its lawsuit, Affy said the deal would be completed by the end of the first quarter (BAN 1/10/2012).

The lawsuit alleged that Affy's bid for eBioscience constituted a fundamental change under the indenture that governs the notes due in 2038. Tang Capital Ventures was seeking "unspecified damages, temporary and permanent injunctive relief against completion of the eBioscience acquisition, and other remedies."

As part of its settlement with Tang Capital Partners, Affy said it will commence a tender offer to repurchase the entire $95.5 million aggregate principal amount of notes currently outstanding at par plus accrued interest. Tang Capital Partners, which owns approximately $78.3 million principal amount of the notes, has agreed to tender all of its notes into the offer, Affy said.

Affy also said in the SEC filing that, based on discussions with the lenders who provided the financing commitments for the acquisition of eBioscience, it now expects that it will be required to restructure the financing arrangements in order to be able to complete the acquisition. The company has not reached any agreements or understandings with its lenders or other financing sources, it noted.