Blank check company Advanced Technology Acquisition Corporation (AMEX: AXC) (ATAC) yesterday cancelled its letter of intent to merge with Bioness Inc., and is therefore closing down. The company will ask shareholders to approve the liquidation of its trust account.
ATAC's share closed yesterday at $8.01. The company said that if the plan of liquidation is approved, it expects to distribute $8.12 per share from its trust account as soon as is reasonably practicable after the shareholders' meeting.
The financial report for the first quarter of 2009 of parent company Teuza - A Fairchild Technology Venture Ltd. (TASE:TUZA), published last week, hinted of things to come. Teuza said that there were disagreements over the Bioness acquisition.
ATAC is the last of seven Israeli blank check companies (also called special-purpose acquisition companies (SPAC)) set up in the past four years. These companies raised $475 million altogether. Only one of them ever realized its plan of merging with a private company: Israel Technology Acquisition Corporation (ITAC) which merged with IXI Mobile Inc. (Bulletin Board:IXMO) in 2006.
ATAC was founded by Dr. Shuki Gleitman, a managing partner atPlatinum Neurone Ventures and chairman Moshe Bar-Niv and CEO Leora Lev, both partners at Ascend Technology Partners. ATAC raised $172.5 million in 2007, and subsequently looked for a company to merge with.
In the interim, the business model of the blank check company collapsed as cash became a more expensive commodity. 80% of shareholders have to approve an acquisition. If no deal is ever closed, the blank check company will return the money to the shareholders, so few of them have an interest in approving a takeover nowadays.
Six months ago, only hours before an ultimatum for ATAC to return its shareholders' money, the company announced that it would acquire Bioness, although it disclosed no details. That deal will not take place after the parties could not bridge the differences, even though it could have benefited both companies. ATAC would have avoided liquidation, and Bioness would have obtained considerable capital.
The terms Bioness was offering ATAC apparently failed to persuade its shareholders to forego the money that they would otherwise get back if ATAC were liquidated. Sources close to the company said that the differences between the companies escalated to personal acrimony during the negotiations.
Teuza owns 6% of Bioness. Teuza president and CEO Avi Kerbs said, "The deal was a good opportunity for obtaining an outside valuation for Bioness. I would have been very pleased had it gone forward."
Bioness, controlled by US Jewish billionaire Alfred E. Mann, develops high-tech devices designed to provide functional and therapeutic benefits for individuals afflicted with neurological diseases and disorders such as stroke, multiple sclerosis, traumatic brain injuries, or spinal cord injuries.
Published by Globes [online], Israel business news - www.globes-online.com - on June 3, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009