Osiris Shareholders Sue to Block Smith & Nephew Acquisition

Two Osiris Therapeutics, Inc. shareholders have brought a class-action lawsuit to attempt to block the company’s pending acquisition by Smith & Nephew.

OTW previously reported that UK-based global technology giant Smith & Nephew plc agreed to acquire Columbia, Maryland-based regenerative medicine company Osiris Therapeutics for $19.00 per share in cash at a total value of approximately $660.5 million. Osiris claimed that this price is a 37% premium, based on the company’s 90-day weighted average stock price.

The transaction is expected to close in the second quarter of 2019, subject to appropriate antitrust clearances and the tender of the majority of the outstanding shares of Osiris in favor of the transaction.

Elizabeth Recupero and Raymond Morrison filed their suit on March 22, 2019 on behalf of themselves and all other similarly situated public shareholders of Osiris.

The plaintiffs argue that the offer price of $19.00 per share does not adequately reflect Osiris’ future growth prospects. The plaintiffs allege that the valuation of $19.00 per shares reflects a revenue growth of just 10%, 10%, 9%, and 9% for 2019, 2020, 2021, and 2022, respectively.

Osiris’ revenue growth for 2018 was 20.5%.

Utilizing Cantor Fitzgerald’s Discounted Cash Flow analysis and “the application of more appropriate revenue growth rates during the forecast period of 15 to 18 percent,” the plaintiffs claim that Osiris is worth at least $24 a share.

The lawsuit requests that Osiris’ common shareholders receive the material information that the board omitted “so that they can meaningfully assess whether the Proposed Transaction is in their best interests prior to the vote.”

The lawsuit further alleges that Osiris’ board of directors violated the Securities and Exchange Act of 1934 and various other United States Securities and Exchange Commission rules in connection with the board’s agreement to sell the company. —