NEW YORK, Feb. 28, 2011 /PRNewswire/ -- Mangrove Partners,
owners of 149,373 shares representing approximately 5.71% of the
outstanding shares of CPEX Pharmaceuticals, Inc. (Nasdaq: CPEX),
today announced that it has decided to vote against the sale and
against giving CPEX the right to adjourn the special meeting.
Mangrove Partners made its decision after critically examining the
merits of the proposed sale of CPEX for $27.25 per share or only 3.6x management's
forecast operating profit in 2011. Mangrove Partners has
prepared a presentation containing analysis regarding the merger
for both CPEX's Board of Directors and fellow stockholders and has
posted the analysis to the new website www.cpexripoff.com.
Commenting on the transaction, Nathaniel
August, Director of Mangrove Partners, said "Our analysis
led us to the clear conclusion that CPEX is worth far more than
$27.25 per share and that there are
straightforward means of achieving a higher value. To share this
analysis, we created the website www.cpexripoff.com. We welcome
feedback from our fellow stockholders."
Mangrove Partners has voiced its opposition to the proposed
transaction based upon the following factors:
- Inadequate Price: The merger represents only 3.6x 2011
forecast operating profit and is a discount to the debt being
raised by the acquirer. The inadequate price was further revealed
when the acquirer's stock more than doubled after announcing it
will acquire CPEX.
- Better Alternatives: CPEX can refocus itself on paying
its substantial earnings out to stockholders and can afford a
dividend of over $4 per share without
touching its estimated net cash position of over $9 per share. Alternatively, CPEX may be able to
spinoff Testim into a royalty trust paying over $8 per share in annual dividends. We believe CPEX
is worth substantially more as a standalone company than the merger
consideration being offered.
- Conflicted Management: Management is set to receive
change of control payments of over $7.3
million or over 10% of the value of CPEX.
- Faulty Fairness Opinion: The fairness opinion is lacking
key elements such as comparable transactions and comparable
companies analyses. The DCF analysis provided to stockholders
appears misguided and we could not replicate its conclusions using
the banker's methodology.
Investors with questions concerning our reasons for voting
against the merger should call Steven C.
Balet or Geoff Sorbello at
Okapi Partners LLC, which is advising Mangrove Partners, toll free
at 1-877-285-5990.
Mangrove Partners' original letter to CPEX can be found
here:
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http://sec.gov/Archives/edgar/data/1418919/000114420411004807/v209462_ex99-2.htm
SOURCE Mangrove Partners