Highlights Public Opposition to Proposed Merger
from Skye Fund III, a Long-Term SomaLogic Investor
Deeply Troubled by Information in Complaint
Filed by Company Founder and Chief Technology Officer That Strongly
Suggests Merger Proxy Omits Critical Information About Conflicted
Merger Process
Urges Shareholders to Vote “AGAINST” the Value-Destructive and Immensely
Problematic Proposed Merger with Standard BioTools
Madryn Asset Management, LP (“Madryn Asset Management” and,
collectively with its affiliates, “Madryn”), a holder of
approximately 4.2% of the outstanding common stock of SomaLogic,
Inc. (“SomaLogic” or the “Company”) (Nasdaq: SLGC), today issued a
letter to shareholders to point out the numerous false and
misleading statements in the investor presentation (the “SomaLogic
Investor Presentation”) issued on December 19th by the Company in
support of its proposed merger (the “Proposed Merger”) with
Standard BioTools Inc. (“Standard BioTools”) (Nasdaq: LAB). Madryn
also highlights additional SomaLogic shareholder opposition to the
Proposed Merger as well as a recently filed complaint that should
give investors serious pause about the motivations behind, and
process undertaken to reach the agreement for the Proposed
Merger.
Madryn strongly urges shareholders to vote “AGAINST” the
Proposed Merger. Shareholders should visit
www.NoSomaLogicMerger.com for additional information and to learn
how to cast their votes.
***
December 21, 2023
Dear Fellow Shareholders,
SomaLogic’s recently issued presentation attempting to gain your
support for its Proposed Merger with Standard BioTools contains
numerous misleading statements and false assertions that should be
highlighted for shareholders of SLGC, as detailed in the Appendix
to this letter.
First, let us reiterate that we believe the Proposed Merger is
deeply problematic for three key reasons:
- The Proposed Merger drastically undervalues SomaLogic—in
fact, the current merger consideration is worth less than the
Company’s cash.
- The deal process was flawed and contained numerous conflicts
of interest.
- SomaLogic has far superior alternatives for value
creation—including as a standalone company.
Additionally, Madryn is not alone in its views. Skye Fund III, a
fellow long-term SomaLogic investor that owns approximately 2% of
shares, issued a letter yesterday publicizing its opposition to the
Proposed Merger.
Further, SomaLogic Founder Dr. Larry Gold and SomaLogic Chief
Technology Officer Dr. Jason Cleveland filed a class action
complaint against the Company and its Board of Directors (the
“Board”) in the Delaware Court of Chancery on December 18,
2023.
The complaint alleges details that apparently are not included
in the Company’s background of the Proposed Merger but were
unearthed by Messrs. Gold and Cleveland through, among other
things, materials—such as Board minutes, presentations,
etc.—obtained through a books and records request. These details
include:
- There are multiple long-range forecasts that predicted higher
revenue or higher profitability which were reviewed by the Board
but are not disclosed in the Company’s proxy statement (the “Merger
Proxy”).
- The Board’s receptiveness to an unprompted reduction in the
proposed exchange ratio from a range of 1.26 to 1.52 LAB shares per
SLGC share to 1.11 is irreconcilable with SLGC shareholders’
interests.
- There is extensive financial interdependence between Eli Casdin
and the SomaLogic directors who were members of the Board’s
Transaction Committee (the “SomaLogic Transaction Committee”) that
is not disclosed in the Merger Proxy.
We believe that the facts cited in this complaint are clearly
cause for concern among SomaLogic shareholders and cast extreme
doubt on the validity of the process undertaken to strike the
Proposed Merger agreement. We call upon the Company to update its
disclosure appropriately so that SomaLogic shareholders have the
necessary facts to make a fully informed decision.
In conclusion, we reiterate that SomaLogic shareholders would be
ill-served by the Proposed Merger because it will crystallize a
clearly undervalued valuation for SLGC in a deeply subordinated
position in the combined company.
Sincerely,
Avinash Amin, MD
Managing Partner, Madryn Asset Management, LP
Rebuttals to SomaLogic’s Investor
Presentation
Responses to slide 7 of the SomaLogic Investor Presentation,
titled: “[The] Merger is designed to Drive Shareholder
Value”
Purported Reasons for
Proposed Merger
Madryn Response
Positions SomaLogic for
Success in Current Market
- In our opinion, SLGC is already positioned for success because
of its strong cash balance—the Company does not need to make rash,
shortsighted decisions driven by the current capital markets
environment.
- We think that a standalone SLGC has the runway to weather the
current cycle and execute on its core business.
- We believe that growth LST/Dx companies, such as SLGC, should
not transact in this environment unless absolutely necessary as it
crystallizes their depressed, near-term valuations.
Drives Value Creation
- The Proposed Merger is clearly viewed by the market as value
destructive given the 39% decline in SLGC stock post announcement
of the Proposed Merger; we believe that LAB shares only recovered
because the acquisition of Olink Holding AB (publ) (Nasdaq: OLK) by
Thermo Fisher Scientific Inc. (NYSE: TMO) (the “Olink Transaction”)
caused the market to re-rate SLGC, directly benefiting LAB
shares.
- Prior to the announcement of the Proposed Merger, SLGC’s share
price was $2.30. The value of the merger consideration as of market
close on December 20, 2023 was $2.14. There is no premium and
shares would be even lower if not for the re-rate in SLGC value
following the Olink Transaction.
- SLGC shareholders would not have equitable representation;
there are clear rights afforded to the Series B Preferred holders
that are not afforded to SLGC shareholders.
Adds New Vectors for Value
Creation and Reduces Risk
- The facts reveal that members of the SomaLogic Transaction
Committee lack independence in light of numerous ongoing business
relationships with the recused board member, Eli Casdin—these
relationships invalidate the Company’s claims that Mr. Casdin
wielded no influence over the process.
- SLGC shareholders are accepting the 4th ranking security when
they are currently the most senior ranking security in their own
capital structure—why would that be acceptable for SLGC
shareholders?
Responses to slide 20 of the SomaLogic Investor Presentation,
titled: “Madryn’s Concerns are Misplaced”
Company’s Implied
Claims
Madryn Response
Proposed Merger Does Not
Undervalue SLGC
- SLGC has sustained significant value compression; as stated in
our materials, we believe that growth LST/Dx companies should not
transact in this environment unless necessary to finance since
depressed, transitory valuations then become crystallized.
- The current consideration fails to offer any premium to SLGC
shareholders ($2.14 vs. $2.30 before announcement and $2.41 per
share in cash).
Proposed Merger Process was
Not Flawed
- The very basis for launching the process was highly flawed—why
does a company with $450mm in cash and projections representing
that it will never need to finance again,1 decide that it is
prudent to pursue a highly dilutive merger?
- As previously illustrated by Madryn, the members of the
SomaLogic Transaction Committee have conflicts of interest with
SLGC shareholders.
- The Merger Proxy’s disclosures, in our opinion, omit material
concerns brought to light in the class action complaint filed by
SLGC’s Founder and its Chief Technology Officer.
Capital Structure is Not
Risky
- In our opinion, it is not in SLGC shareholders’ interests to
contribute SLGC’s strong cash balance to the combined company while
adopting LAB’s approximately $315mm of debt and debt-like
securities.
- In the event of a sale of the combined company, the Series B
Preferred Put Right would shift $250mm of value to Series B
Preferred holders at the expense of SLGC shareholders.
- Page 43 of the Merger Proxy explicitly outlines the material
risks to SLGC shareholders posed by the capital structure: “Holders
of the Series B Preferred Stock have rights, preferences and
privileges that are not held by, and are preferential to, the
rights of the holders of Standard BioTools Common Stock, which
could adversely affect the liquidity and financial condition of the
combined company, result in the interests of holders of the Series
B Preferred Stock differing from those of the holders of Standard
BioTools Common Stock and make an acquisition of the combined
company more difficult.”
- The Merger Proxy goes on to say on page 44: “The terms of the
Series B Preferred Stock could also limit the ability of the
combined company to obtain additional financing or increase
borrowing costs, which could have an adverse effect on the
financial condition of the combined company.”
- Why does the Company represent that the capital structure is
not a risk if the very language in the Merger Proxy states
otherwise?
Madryn Urges SomaLogic Shareholders to Vote
“AGAINST” the Proposed Merger at the
Company’s January 4, 2024, Special Meeting
Voting “AGAINST” the Proposed Merger Will Protect the
Value of Shareholders’ Investment and Allow SomaLogic to Pursue
Vastly Superior Alternatives
Visit www.NoSomaLogicMerger.com
for Additional Information
***
About Madryn Asset Management
Madryn Asset Management is a leading alternative asset
management firm that invests in innovative healthcare companies
specializing in unique and transformative products, technologies
and services. The firm draws on its extensive and diverse
experience spanning the investment management and healthcare
industries and employs an independent research process based on
original insights to target attractive economic opportunities that
deliver strong risk-adjusted and absolute returns for its limited
partners while creating long-term value in support of its portfolio
companies.
IMPORTANT ADDITIONAL INFORMATION
Madryn Asset Management, Madryn Health Partners, LP, Madryn
Health Partners (Cayman Master), LP, Madryn Health Advisors, LP,
Madryn Health Advisors GP, LLC, Madryn Select Opportunities, LP,
Madryn Select Advisors, LP, Madryn Select Advisors GP, LLC and
Avinash Amin (collectively, the “Participants”) are participants in
the solicitation of proxies from the stockholders of SomaLogic in
connection with the special meeting of stockholders (the “Special
Meeting”). On December 18, 2023, the Participants filed with the
U.S. Securities and Exchange Commission (the “SEC”) their
definitive proxy statement and accompanying GREEN Proxy Card
in connection with their solicitation of proxies from the
stockholders of SomaLogic for the Special Meeting. The definitive
proxy statement and accompanying GREEN Proxy Card are first
being disseminated to stockholders on December 22, 2023. MADRYN
STRONGLY ADVISES ALL STOCKHOLDERS OF SOMALOGIC TO READ THE
DEFINITIVE PROXY STATEMENT, THE ACCOMPANYING GREEN PROXY CARD AND OTHER DOCUMENTS RELATED TO
THE SOLICITATION OF PROXIES BY THE PARTICIPANTS, AS THEY WILL
CONTAIN IMPORTANT INFORMATION, INCLUDING ADDITIONAL INFORMATION
RELATED TO THE PARTICIPANTS AND THEIR DIRECT OR INDIRECT INTERESTS
IN SOMALOGIC, BY SECURITY HOLDINGS OR OTHERWISE. The definitive
proxy statement and an accompanying GREEN Proxy Card will be
furnished to some or all SomaLogic stockholders and is, along with
other relevant documents, publicly available at no charge on the
SEC’s website at http://www.sec.gov/. In addition, beginning
December 22, 2023, the Participants will provide copies of the
definitive proxy statement without charge, when available, upon
request. Requests for copies should be directed to Madryn Asset
Management.
Disclaimer
This material does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities described
herein in any state to any person. In addition, the discussions and
opinions in this press release are for general information only,
and are not intended to provide investment advice. All statements
contained in this release that are not clearly historical in nature
or that necessarily depend on future events are “forward-looking
statements,” which are not guarantees of future performance or
results, and the words “anticipate,” “believe,” “expect,”
“potential,” “could,” “opportunity,” “estimate,” and similar
expressions are generally intended to identify forward-looking
statements. The projected results and statements contained in this
press release that are not historical facts are based on current
expectations, speak only as of the date of this press release and
involve risks that may cause the actual results to be materially
different. Certain information included in this material is based
on data obtained from sources considered to be reliable. No
representation is made with respect to the accuracy or completeness
of such data, and any analyses provided to assist the recipient of
this presentation in evaluating the matters described herein may be
based on subjective assessments and assumptions and may use one
among alternative methodologies that produce different results.
Accordingly, any analyses should also not be viewed as factual and
also should not be relied upon as an accurate prediction of future
results. All figures are unaudited estimates and subject to
revision without notice. Madryn disclaims any obligation to update
the information herein and reserves the right to change any of its
opinions expressed herein at any time as it deems appropriate. Past
performance is not indicative of future results.
1 Madryn Presentation, slide 23.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231221586289/en/
John Ferguson / Joseph Mills Saratoga Proxy Consulting,
212-257-1311 info@saratogaproxy.com
Joe Germani / Ashley Areopagita Longacre Square Partners,
646-386-0091 Madryn@LongacreSquare.com
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