Biota Falls Most in Eight Months on Merger with Nabi

Biota Holdings Ltd. (BTA), an Australian company that earns royalties on influenza drugs, slumped in Sydney trading after agreeing to merge with Nabi Biopharmaceuticals (NABI) to gain access to the Nasdaq market.

Biota fell as much as 9.5 percent, the biggest decline on an intraday basis since Aug. 9., and was trading 7.9 percent lower at 87 Australian cents as of 1:36 p.m. local time. Rockville, Maryland-based Nabi will issue new stock to acquire all of Biota’s shares, with investors in the Australian company to own 74 percent of the combined business.

The agreement comes more than 12 months after Melbourne- based Biota hired Piper Jaffray Cos. (PJC) to help consider capital raising or merger and acquisition structures. Biota Chairman Jim Fox declined to specify what value the merger puts on his company’s stock and said shifting from the Australian market to Nasdaq may improve liquidity for investors and help it develop its drug program for the U.S. government.

“It helps to be in America for that, and that seems to be one of the primary motivations, although I don’t understand why they can’t do it in Australia,” said Shane Storey, an analyst at Wilson HTM Investment Group (WIG) in Brisbane. “There’s some fundamental sense in this.”

The deal has the backing of directors at both companies and investors don’t need to take any action now with further information to be released in the “next few weeks,” Biota said in a statement.

Nabi has a market value of $79.4 million, based on its April 20 closing price of $1.85, and its stock has plunged 67 percent in the past 12 months. The company said July 18 that a treatment to help smokers quit failed to show effectiveness in clinical trials.

After the deal is completed, the combined company will be known as Biota Pharmaceuticals Inc., it said.

Piper Jaffray advised both Biota and Nabi separately, Biota’s Fox said on a conference call today. Biota has also hired Lonergan Edwards & Associates as an independent adviser, he said.

To contact the reporters on this story: Natasha Khan in Hong Kong at nkhan51@bloomberg.net;

To contact the editor responsible for this story: Jason Gale at j.gale@bloomberg.net