Holding onto shares under conditional offer may sometimes backfire

Nordic biopharmaceutical company Affitech A/S (CPH AFFI) has seen turbulent times as of late. Back in November Trans Nova Investments Limited made a voluntary conditional public offer on the company. Prior to the offering Trans Nova owned a hair over 40% of Affitech. One of the conditions in the offer was for the company to own or to receive valid acceptances of more than 90% of shares, a fairly typical offer condition in the Nordic countries, which would have allowed the company to forcefully squeeze out the minority.

Trans Nova was not able to attain sufficient number of valid acceptance even after extending the offer period until January 25th. Thus the offer was not completed and Trans Nova decided not to purchase any Affitech shares as part of the offer. This means that many shareholders who had pressed accept on the offer through the service given by their financial services company may have been disappointed. The flipside is that 25% of the owners ”must have” felt that the offer price was too low. Trans Nova had been offering DKK 0.22 per each Affitech share. The share was trading between 21 and 23 øres but following the non-completion announcement has now dropped to 15 øre a share. In one year the stock has lost two thirds of its value.

Trans Nova, which is a Russian investment firm, became involved with Affitech in 2010, by subscribing to new shares in connection with a strategic partnership that was formed between NauchTekhStroy Plus (a JV subsidiary of Pharmstandard) and Affitech. The partnership has subsequently been modified with rights and obligations moved from NauchTekhStroy to newly established International Biotech Center Generium, which dubs itself as the first private scientific research company in Russia .

Few days following the news of the Trans Nova offer withdrawal, Affitech said that IBC Generium submitted Clinical Trial Application to the Russian Health Authority for a phase 1 clinical trial with Affitech’s leading anti¬body drug candidate AT001/r84, showing that some progress on that front is nonetheless being made.