Half a year after Sinovac aborted its attempt to go private amid a wild series of events involving rebel investors, the Chinese vaccine producer has implemented a rare “poison pill” defense against a shareholder coup.
The company is issuing new shares to dilute investor holdings so certain shareholders can't take control, Sinovac said, tagging 1Globe Capital, Chiangjia Li, OrbiMed Advisors and other investors as collaborators attempting a takeover.
Those investors' holdings had come to account for 40% of outstanding shares, Reuters reported, far above the 15% necessary to trigger the poison pill. Sinovac's board decided to put the new share issue into motion this month after the High Court of Justice of Antigua and Barbuda ruled “there was a secret plan to take control of the company” at Sinovac's annual meeting last year. Sinovac is incorporated in Antigua.
The new share issue—which excludes the rebel investors—will naturally deflate Sinovac's stock price. The company will now have 98.9 million common shares outstanding, up from 71.1 million. Sinovac also issued 14.6 million new series B preferred shares, which share in dividends and carry voting rights.
Sinovac’s unusual decision—Reuters reports it’s the first “poison pill” defense in more than a decade—follows a roller-coaster era at the company. It’s been battling with the rebels for control for years in a tug-of-war that included rival boards of directors, a factory raid by “dozens of unnamed officials” and the planned takeover of a February 2018 investor meeting. Sinovac had planned to go private to defend against the takeover attempt but dropped that initiative in July.
Aside from the takeover drama, the vaccine maker also faced a possible Nasdaq delisting over a filing deficiency, but it was able to sort out that problem. The company markets a vaccine against enterovirus 71, plus others against hepatitis A and B, seasonal flu, H5N1 pandemic flu, H1N1 swine flu and mumps.