Biota Holdings Ltd., an Australian company that earns royalties from influenza drugs, slumped in Sydney trading after agreeing to merge with Nabi Biopharmaceuticals to gain access to the Nasdaq market.
The stock fell 9 percent to 86 Australian cents at the close of trading, the biggest decline since June 27. Rockville, Maryland-based Nabi will issue new stock to acquire all of Biota’s shares, with investors in the Melbourne-based company to own 74 percent of the combined business.
Biota hired Piper Jaffray Cos. more than 12 months ago to help it consider a capital raising or merger and acquisition structure. Biota Chairman Jim Fox declined to specify what value the deal puts on his company’s stock and said shifting from the Australian market to the Nasdaq may improve liquidity for investors and help it develop a 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 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.
“This merger is an exciting opportunity for Nabi’s shareholders,” Raafat Fahim, president and chief executive officer of Nabi, said in a statement. “It will trigger the distribution of significant cash to current Nabi shareholders, as well as enable their participation in the growth opportunity of the combined company, which includes royalty generating products and a rich pipeline.”
A voicemail message left by Bloomberg News with the media office of Nabi outside of normal business hours wasn’t immediately returned.
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.