Cellular Biomedicine Jumps 35% on Deal to Be Taken Private

The biopharmaceutical firm's stockholders will receive $19.75 per share owned.

Author: Anthony Russo   

Shares of Cellular Biomedicine Group, Inc. (Nasdaq: CMBG) skyrocketed 35% by midday Wednesday on news of signing a deal to be acquired by a newly-formed entity consisting of a consortium including the company's management team and private equity investors.  

The biopharmaceutical firm said stockholders will receive $19.75 for each share they own. According to CMBG, the price represents a premium of roughly 31% over its 30 trading-day average price, as of Tuesday. The agreement today is slightly higher than the buyout proposal of $19.50 per American depositary share it received in November 2019.

The company's management, led by chief executive officer Bizuo Liu, owns around 52% of CMBG's outstanding shares. CMBG said that it will conduct a "30-day "go-shop" process."

"CBMG is permitted to solicit, initiate, facilitate or encourage acquisition proposals and to participate in discussions or negotiations with respect to any acquisition proposal," CMBG said today.

The company added, "Following the "go-shop" process, CBMG may respond to certain unsolicited acquisition proposals and, during the first 15-day period following the "go-shop" process, CBMG may continue to engage with certain third parties that have made acquisition proposals during the "go-shop" process, in each case, subject to the terms and conditions of the merger agreement."

While the merger would result in CMBG going private, one law firm wasted no time to commence an investigation on CMBG.

"The investigation concerns whether Cellular Biomedicine and its board of directors violated the federal securities laws and/or breached their fiduciary duties to shareholders," Halper Sadeh LLP said in a statement today following CMBG's announcement.

But if you were a shareholder at the beginning of the year, then today was a big win. Thanks to today's merger agreement, shares of CMBG are now up nearly 19% year-to-date. However, if you were an investor in CMBG since May 2015, when it was trading as high as $41.73—all you can do now is scratch your head. As of intraday, CMBG traded as high as $19.50 per share and as low as $19.19 per share.

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(Yahoo! Finance: CMBG)

Under the deal, Jefferies LLC is serving as the lone financial advisor to the Special Committee, while White & Case LLP is serving as legal counsel Special Committee.