What started out as a bidding war over Zila Pharmaceuticals is turning into a legal battle.
Intelident Solutions, which earlier this month made an offer to buy Zila, has now filed a complaint against Zila, claiming breach of fiduciary duty. Intelident also named Tolmar Holding -- which has also offered to purchase Zila -- in the complaint, accusing Tolmar of aiding and abetting Zila's breach of fiduciary duties.
On June 25, Zila, the manufacturer of the Vizilite Plus oral cancer detection system, entered into a definitive merger agreement with Tolmar for $0.38 per share. The offer includes the purchase of Zila's existing $12 million senior secured convertible debt from existing note holders for $5 million.
On July 7, Intelident announced that it had made an offer to buy Zila for a higher per share amount -- $0.42 -- for a total of $4.4 million. But on July 10, Zila's board of directors decided to decline Intelident's offer, saying that, although the per-share amount was higher, there did not appear to be any specific provisions for Zila's secured convertible debt.
This rebuff prompted Intelident to file its complaint against Zila and Tolmar. Intelident is requesting that the court suspend any further efforts by Zila and Tolmar to complete their merger agreement and enable Intelident to take the steps necessary to pursue its proposal.
"We regret that we have had to resort to legal action to obtain fair consideration from Zila's directors, but Zila has blocked all our efforts to bring a better offer to Zila's shareholders," said Intelident CEO Thomas Marler in a press release.
And, contrary to Zila's assertion that Intelident's offer had "strings attached," there are very few differences in the terms and conditions between Intelident's proposed agreement and the Tolmar merger agreement other than Intelident's higher price per share offer, Marler added.
Copyright © 2009 DrBicuspid.com
