I have no way of knowing for certain why Ramius has been so quick to initiate what looks to be a developing Proxy fight at the next annual meeting (probably in the Jan/Feb 2011 time-frame). But it is my belief that they might be preparing for a possible bid to purchase SRDX. And, I think that SRDX is vulnerable.
So, I’ve endeavored to understand Surmodics’ anti-takeover provisions.
A summary of the original anti-takeover provisions is provided in the original Prospectus (SEC Form 424B4, 3/4/1998, pg 9-10) under the heading: “ADVERSE EFFECT OF UNDESIGNATED STOCK AND ANTI-TAKEOVER PROVISIONS”. see: http://www.sec.gov/Archives/edgar/data/924717/0001047469-98-008556.txt
Surmodics also had a Shareholder Rights Plan. But to my knowledge it expired on April 5, 2009 without renewal... This might be an oversight on my part, there are several filings which I have yet to check. In any event the registration of Preferred Stock Purchase Rights can be found at http://www.sec.gov/Archives/edgar/data/924717/0000914190-99-000140.txt
At this time, it appears to me that the most important active anti-takeover provisions relate to the fact that Surmodics is incorporated in Minnesota. Quoting the Prospectus (pg 38-39):
UNDESIGNATED STOCK (pg 38)
Under governing Minnesota law and the Company's Restated Articles of Incorporation, as amended, no action by the Company's stockholders is necessary, and only action of the Board of Directors is required, to authorize the issuance of any of the undesignated stock. The Board of Directors is empowered to establish and to designate each class or series of the undesignated shares and to set the terms of such shares (including terms with respect to redemption, sinking fund, dividend, liquidation, preemptive, conversion and voting rights and preferences). Accordingly, the Board of Directors, without stockholder approval, may issue such undesignated shares in one or more series of preferred stock having rights, preferences, privileges or restrictions, including voting rights, that may be greater than the rights of holders of Common Stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of the Common Stock until the Board of Directors determines the specific rights of the holders of such preferred stock. However, the effects might include, among other things, restricting dividends on the Common Stock, diluting the voting power of the Common Stock, impairing the liquidation rights of the Common Stock and delaying or preventing a change in control of the Company without further action by the stockholders. The Company has no present plans to issue any shares of preferred stock.
MINNESOTA BUSINESS CORPORATION ACT (pg 39)
Certain provisions of Minnesota law described below could have an anti-takeover effect. These provisions are intended to provide management flexibility and to enhance the likelihood of continuity and stability in the composition of the Company's Board of Directors and in the policies formulated by the Board and to discourage an unsolicited takeover of the Company, if the Board determines that such a takeover is not in the best interests of the Company and its stockholders. However, these provisions could have the effect of discouraging certain attempts to acquire the Company which could deprive the Company's stockholders of opportunities to sell their shares of Common Stock at prices higher than prevailing market prices.
Section 302A.671 of the Minnesota Statutes applies, with certain exceptions, to any acquisition of voting stock of the Company (from a person other than the Company, and other than in connection with certain mergers and exchanges to which the Company is a party) resulting in the beneficial ownership of 20 percent or more of the voting stock then outstanding.
Section 302A.671 requires approval of any such acquisitions by a majority vote of the stockholders of the Company prior to its consummation. In general, shares acquired in the absence of such approval are denied voting rights and are redeemable at their then fair market value by the Company within 30 days after the acquiring person has failed to give a timely information statement to the Company or the date the stockholders voted not to grant voting rights to the acquiring person's shares.
Section 302A.673 of the Minnesota Statutes generally prohibits any business combination by the Company, or any subsidiary of the Company, with any stockholder which purchases 10 percent or more of the Company's voting shares (an "interested stockholder") within four years following such interested stockholder's share acquisition date, unless the business combination is approved by a committee of all of the disinterested members of the Board of Directors of the Company serving before the interested stockholder's share acquisition date.
