Medigus audit committee: Dexxon's all-or-nothing offer is against the company's interest.
The audit committee of medical device company Medigus Ltd. (TASE:MDGS) rejected by a 2:1 vote an investment offer by controlling shareholder Dexxon Technologies (2005) Ltd. The audit committee had to approve the investment offer because Dexxon appoints three of Medigus' directors.
The no vote by the audit committee means that Dexxon's offer will not be submitted to Medigus's shareholders for approval.
In rejecting the investment offer, the audit committee cited Dexxon's terms, which were deemed against Medigus's interests, partly because they did not permit the company to raise sufficient capital to pursue its goals effectively and because the terms were liable to damage the company's ability to raise capital or sign deals with third parties. The committee added that Dexxon's terms stipulated a particular value to Medigus, and did not give Medigus the discretion to take only part of the amount offered. Dexxon's all-or-nothing offer would have diluted the stakes of Medigus's other shareholders in proportion to the full amount of the shares allocated to Dexxon, and without Medigus able to reduce the dilution if future circumstances warranted it.
Published by Globes [online], Israel business news - www.globes-online.com - on December 31, 2008
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