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CryoLife Inc. Message Board

  • dlhild@ymail.com dlhild Feb 5, 2010 7:40 PM Flag

    Part 2

    “No” Means “No”
    CryoLife’s first offer to buy Medafor came seven months after the distribution agreement was signed—November 2008. According to a shareholder letter which is available on Medafor’s Web site, that first offer had no price attached to it.

    Medafor said, in effect, thanks but no thanks. Two months after THAT, CryoLife made its second attempt to buy Medafor. This time CryoLife CEO Steve Anderson put a price on his offer—$25 million in CryoLife stock—which trades on the New York Stock Exchange under the symbol “CRY.” Medafor’s answer was, again, “No.”

    Medafor CEO Gary Shope said about the takeover bid in a shareholder letter shortly after the unsolicited offer came in...$25 million in CryoLife stock is “a significant undervaluation that does not come close to even CryoLife’s remaining minimum commitment on its contract with Medafor, which is valued at approximately $40 million.”

    About two months after Medafor said “no” for the second time, Anderson sued Medafor in U.S. District Court for the Northern District of Georgia alleging breach of contract, fraud, negligent misrepresentations, and violations of the RICO racketeering statutes. RICO statutes were originally developed as a tool to attack organized crime. In 25 years of covering medical companies, this is the first time we’ve ever seen a RICO case filed by a buyer against a supplier. In effect, what CryoLife was claiming was that they were stuck in an agreement with a fraudulent racketeering supplier. Not good. In light of those claims, did CryoLife stop or curtail its business activities with this “racketeering” firm? They did not. In fact, CryoLife increased its purchases of MPH from Medafor. Medafor quickly answered CryoLife’s lawsuit (again, all of these court documents are on the Medafor Web site which is www.medaforinc.com) and said, in effect, “BS” in the form of a motion to dismiss the lawsuit. The court agreed with Medafor and the motion to dismiss most of the suit was granted this past December 9th.

 
CRY
9.85-0.10(-1.01%)Jul 31 4:03 PMEDT

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