Cima holder opposes both bids for firm
Susan Feyder, Star Tribune
Published August 23, 2003 CIMA23
A California money management firm that holds a substantial stake in Cima Labs Inc. said Friday it considers both recent acquisition offers for the Eden Prairie company insufficient and plans to vote against them.
West Coast Asset Management Inc., which owns about 2.5 percent of Cima, urged stockholders to vote against the offers from aaiPharma Inc. of Wilmington, N.C., and from Cephalon Inc. of West Chester, Pa.
The all-stock merger offer from aaiPharma, which values Cima at about $22 a share, has been criticized as too low by other money managers and analysts ever since Cima announced its board had approved the deal early this month. A competing all-cash offer of $26 a share from Cephalon announced Thursday has gotten a slightly better response, although most analysts believe the bid doesn't reflect Cima's true value.
Lance Helfert, president of West Coast Asset Management, said his company's valuation of Cima considers its strong balance sheet, cash flow and the sales and earnings growth that have been projected by the company's top management. Depending on the multiple applied, the value of the company works out to $32 to $40 a share, he said.
Helfert said his firm, which has about $100 million in total assets under management, began buying Cima stock about 20 months ago. Helfert said he has not spoken with Cima officials since Cephalon announced its bid. He said he has shared his views about the inadequacy of the aaiPharma offer with company officials.
Tony Green, an analyst with Craig-Hallum Capital Partners in Minneapolis, said Helfert's valuation of Cima is similar to his own.
Green, who changed his rating on Cima stock from "buy" to "hold" after the aaiPharma deal was announced, previously had set a target price in the mid-$30s on Cima shares. Before the aaiPharma bid was disclosed, Cima stock was trading at about $26 a share.
Cima stock jumped 14 percent Thursday on news of the Cephalon offer and has been trading over the $26 offering price, leading Green and others to conclude that the market believes another offer could surface.
"We don't think this deal will get done at $26 a share," Helfert said.
However, Green said Friday that he doesn't expect if any new bids to surface, they probably won't be over $28 a share.
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