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Biopharmaceutical company inks tender offer agreement to acquire National Holdings

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Biopharmaceutical company inks tender offer agreement to acquire National Holdings

NationalHoldings Corp. has agreed to be purchased by Fortress Biotech Inc.

Fortress will offer to purchase, through wholly owned unit FBIOAcquisition Inc., up to 100% of National Holdings' shares at $3.25 per share incash. The offer price represents a premium of about 44% over the closing priceof National Holdings common stock on April 27, according to a news release.

The National Holdings board approved the agreement and isremaining neutral and making no recommendation to shareholders as to whether toaccept the offer and tender their shares.

If more than 80% of the National Holdings shares aretendered, the company will undergo a merger and will no longer by a publiccompany. After the tender offer closes, if less than 80% of the shares aretendered in the offer, the company will remain publicly traded. In that event,shareholders post-tender offer will receive from National Holdings a five-yearwarrant per held share to buy an additional common share at $3.25.

After the tender offer closes, regardless of the number ofshares purchased, Fortress will have the right to appoint a majority ofNational Holdings' board.

If the merger condition is not satisfied upon closing thetender offer, National Holdings' board size will drop to seven members from 11.All board members will resign except Chairman and CEO Robert Fagenson andPresident Mark Goldwasser. Fortress will be entitled to appoint the other fiveboard members. If the merger condition is satisfied, the board size will bereduced to five members with Fagenson and Goldwasser remaining, and Fortresswill be entitled to appoint three members. In that case, Fagenson andGoldwasser will resign from the board after the deal closes, and Fortress willappoint two board members in their place.

"[Fortress plans] to enhance [National Holdings']biotech and life science investment banking franchise … while also identifyingimportant additional verticals to broaden their breadth of product offerings,"FBIO Acquisition Vice Chairman and former National Holdings Chairman MichaelWeiss said in a news release.

National Holdings would be responsible for a termination feeof about $1.8 million, and Fortress would be responsible for a termination feeof about $4.4 million if the merger agreement is terminated under certaincircumstances. Both parties would also be responsible for reimbursing the otherfor certain transaction expenses up to $750,000 if the agreement is terminatedunder certain circumstances.

The agreement with Fortress comes CB Pharma Acquisition Corp.made a nonbinding proposal to buy National Holdings. B. Riley Financial Inc.provided a letter ofintent on behalf of its subsidiaries and other shareholders a few weeks laterin December 2015 to buy the company but withdrew its proposal in January. Meanwhile, NationalHoldings continueddiscussions with CB Pharma on its nonbinding proposal until those talks in early March.