Biotech company Sirtex has entered a trading halt ahead of an announcement relating to "material developments" in the $1.9 billion proposal it received from CDH Investments earlier this month.
The $US20 billion Chinese-based alternative asset manager has now made a formal offer for Sirtex at $33.60 cash a share. The offer is by CDH Genetech, part of the CDH Investments group.
The CDH offer follows the January $1.6 billion bid from US cancer treatment developer Varian Medical offer to acquire Sirtex at $28 per share. Both offers were still being considered by the board, the company said, and Varian could make a counter-proposal.
The CDH offer, which first was made on May 4 as a non-binding offer, is subject to due diligence and approval by CDH's investment committee as well as the Foreign Investment Review Board.
Sirtex is the subject of two bids.Credit: Michele Mossop
On Tuesday the company announced a trading update saying dose sales for the period January 1 to April 30 were down 10.6 per cent.
"Since the announcement of the Varian scheme, Sirtex has experienced uncertainty and distraction, and this has contributed to dose sales being below expectations," chief executive Andrew McLean said. "As a result our second half dose sales are expected to be relatively flat versus the first half."
He said Sirtex now expects underlying EBITDA in FY2018 will be at the lower end of the $75 million to $85 million guidance previously issued.
Sirtex stockholders had been set to vote on the Varian bid on May 7, but this was put on hold because of the CDH Investments bid.
Earlier this month Varian Medical, which is headquartered in Palo Alto, California, responded to the proposal from CDH Investments.
Varian chief executive and president Dow Wilson had said in a statement on May 4 that Varian's bid carried far less risk for Sirtex stockholders and had been "unanimously approved by both boards of directors, has fully committed financing and has received all necessary regulatory approvals".
"We stand ready to complete the acquisition following the receipt of Sirtex stockholders' approval and the satisfaction of other closing conditions," Mr Wilson said.
In addition to assessing proposed takeovers, Sirtex has been facing shareholder class actions relating to a December 2016 downgrade of its sales growth forecasts for its microspheres, which are used to treat some cancers. Two class actions, which involve a 37 per cent fall in share price on December 9, 2016, were recently consolidated into one by the Federal Court.
Separate to the class action, its former chief executive, Gilman Wong, is also being investigated by the Australian Securities and Investments Commission over trades he made in the troubled biotechnology group's shares ahead of a profit downgrade. Mr Wong has denied any wrongdoing.
The company last year paid a penalty of $100,000, without any admission of liability, after being issued with an infringement notice by ASIC for allegedly breaching its continuous disclosure obligations to shareholders.
Sirtex's shares were down on Monday morning before the trading halt was announced at $29.83.