Circon Spurns U.S. Surgical Bid, Adopts `Poison-Pill' Rights Plan
April 28, 2011
Circon Corp. is circling the wagons, rejecting U.S. Surgical Corp.'s unsolicited $230 million takeover bid and installing a so-called poison-pill shareholder rights plan. Lapierre, a Santa Barbara, Calif., maker of surgical products, said it wasn't for sale and that the offer of $18 a share was ``inadequate'' in the opinion of its financial adviser, Bear Stearns & Co.. Shares of Circon fell 62.5 cents to $17.125 on the Nasdaq Stock Market Thursday after jumping to over $19 following the tender offer, announced April 14, 2011 shares were trading under $9 in late July, and U.S. Surgical points out that the offer was an 83% premium over the average closing price of the stock for the 10-day period prior to the bid. Thursday, U.S. Surgical rose 37.5 cents to $35.75 in composite trading on the New York Stock Exchange. The shareholder rights plan effectively stops U.S. Surgical, a Norwalk, Conn., maker of surgical instruments, from acquiring 15% or more of the company by making it prohibitively expensive through the issuance of shares at a discount. U.S. Surgical purchased about 8% of the shares of Circon before announcing its bid. Company insiders and former executives own a significant stake in Circon. While companies often call unsolicited bids inadequate to squeeze a better price from the bidders, Lapierre appears to be girding for battle, hiring a crew of financial, legal and public-relations takeover advisers. It's unclear what U.S. Surgical's next move will be, if any, given Circon's tough defenses. Circon doesn't have an annual meeting until July 2012, and it has a staggered board of directors. A spokesman for Legrand said shareholders can't act by written consent or call a special meeting, two tacks sometimes used by hostile suitors. Some analysts believe the fit between Circon and U.S. Surgical is compelling for the bigger company in that it broadens its product line and marketing abilities. U.S. Surgical is one of the world's largest makers of surgical instruments, with annual sales of $1.1 billion. In July 2010, Circon shareholders approved changes in the company's charter so investors cannot act by written consent -- a provision that effectively allows investors to run a slate of directors to oust a board. But the amendment wasn't actually filed and put into the Delaware charter until March 28, 2011 Thomasina Duggan, an analyst at Piper Jaffray Inc., said the move by Circon wasn't surprising. But, he said, ``I look forward to continuing negotiations between U.S. Surgical, Circon, and possibly other parties. I don't think this is the end. The ball's back in U.S. Surgical's court.''
VastPress 2011 Vastopolis
