Astex Pharmaceuticals, Inc. (NASDAQ:ASTX) And Sarissa Publish Open Letters To Shareholders

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Dallas, Texas 10/11/2013 (Financialstrend) – Astex Pharmaceuticals, Inc. (NASDAQ:ASTX) plan to sell itself to Japanese drug manufacturing company Otsuka Holdings  Co is facing stiff opposition from a section of its shareholders. The banner of revolt was first waved by Hedge fund Sarissa Capital. On learning of Otsuka offer of $8.5 per share or Astex, the hedge fund had declared that it will not be tendering or surrendering its share of the stock. The fund managers argue that the offer price does not account for the huge potential the stock of Astex has to offer over the next couple of years.  Readers should note that as of 12 noon on October 10, the share price of the stock was pegged at $8.5 per share.

In order to drum up support for its offer rebuff, the hedge fund released a open letter to all the share holders of ASTX on October 2. This prompted Astex to respond with its own open letter to its investors in which it countered Sarissa’s arguments. This war of words and public fight between on the bigger stake holders (Sarissa owns close to 5% of 94.71 million shares outstanding) and management of ASTX does not bode well for the stock in question. Many analysts believe Sarissa argument holds some weight. They cite the strong pipeline of potential drugs the company has been trying to develop over the past couple of years and question the timing of striking this deal. They also allege that the $2 million merger success bonus that the CEO of Astex would get paid on successful completion of this deal has influenced the CEO in not performing adequate due diligence on the value of the company before advising its share holders to sign off on the merger plan. The uncertainty surrounding this transaction has pushed the share price of this drug company down by 1.62% over the past week.