After warnings that the dragged-out process was putting the cell therapy company at risk of bankruptcy, bluebird bio now has a new deal to offer shareholders.
Bluebird bio has squeezed a little extra cash for shareholders out of its pending private equity buyers upfront. The amended deal comes days after the company warned that it was at risk of bankruptcy if the deal didn’t wrap up soon.
The original deal, announced in late February, entitled shareholders to $3 in cash per share, with a contingent value right (CVR) to receive $6.84 per share when the company achieves certain net sales milestones. This would have meant a small upfront payment but potentially greater earnings down the line. Now, shareholders can opt to receive $5 per share in cash upfront but they will have to forego the CVR, according to a Wednesday afternoon press release.
The offer is now values bluebird at about $48.9 million, instead of $30 million upfront.
The amendment came right down to the wire for bluebird, which has been warning of financial peril for several quarters. The biotech, once a promising cell therapy outfit worth north of $11 billion as it pursued cutting-edge treatments, had hit a cash gap as of the first quarter, leading to the deal with the private equity firms Carlyle and SK Capital Partners.
But the deal has yet to close nearly three months after announcement. A second offer from investment firm Ayrmid that offered a 50% premium on Carlyle and SK Capital’s original deal also fell through. In a regulatory filing also posted Wednesday, bluebird warned that if the Carlyle and SK Capital offer didn’t close soon it would be in immediate default on a loan. If that were to happen, bluebird would need to seek bankruptcy protection.
And so, at the eleventh hour, the deal was amended. Shareholders seemed to cheer the changes, sending the company’s shares up 50% at market close on Wednesday.
Bluebird’s board urged shareholders to accept the amended offer.
“The bluebird board of directors continues to believe that the transaction with Carlyle and SK Capital, as amended, represents the only viable option for stockholders to receive consideration for their shares,” the release said. If bluebird enters bankruptcy, shareholders would be unlikely to recoup their investment.
The offer has now been extended to May 29 for shareholders to tender their shares. Carlyle and SK Capital have received all necessary regulatory clearances to close the deal.
