Infinity Pharmaceuticals, a biotechnology company, has announced that it is terminating its merger agreement with MEI Pharma. This decision comes after MEI failed to secure stockholder approval for the deal, causing Infinity’s shares to plummet by 43% to 13 cents. Meanwhile, MEI Pharma’s shares experienced a 5% decline.
According to Infinity, MEI was unable to obtain stockholder approval for the merger at a special meeting held on Sunday. Additionally, MEI was unsuccessful in obtaining approval for an adjournment of the meeting. Throughout the process of pursuing stockholder approval for the merger, MEI faced challenges from activist stockholders who launched an unsolicited public proposal to acquire the company at a significant discount to its cash on hand.
In response to this setback, Infinity’s board and management team have decided to implement cost-saving measures in order to conserve resources and protect stockholder value. As part of this decision, Infinity has provided a conditional notice of termination to MEI. If MEI does not obtain stockholder approval, Infinity may be eligible for reimbursement of certain expenses and fees totaling $1 million from MEI.
Moreover, Infinity could potentially receive an additional termination fee of $4 million from MEI under certain circumstances outlined in the joint proxy statement/prospectus related to the merger.
In conclusion, the termination of the merger agreement between Infinity Pharmaceuticals and MEI Pharma represents a significant development in the biotechnology sector. With the implementation of cost-saving measures and the potential reimbursement of expenses, Infinity aims to navigate these challenges and safeguard the interests of its stockholders.