18.46% shareholder seeks changes to Genetic Signatures-Microba merger process

BCAL challenges proposed merger protections

The proposed combination of Genetic Signatures Limited (ASX:GSS) and Microba Life Sciences Limited (ASX:MAP) has drawn a formal challenge from BCAL Diagnostics Limited (ASX:BDX), which owns 18.46% of Genetic Signatures. BCAL has applied to the Takeovers Panel, arguing that the transaction raises control and shareholder-process concerns.

The application targets the deal protection arrangements disclosed by Genetic Signatures, particularly the absence of a fiduciary-out in favour of Genetic Signatures and the proposed break fee. BCAL submits those terms could effectively restrict a competitive market for control of Genetic Signatures. It also argues shareholders have not had enough time or information to assess the transaction properly.

The challenge arrives as the Microba merger progress has continued, with the transaction now framed as a scheme under which Genetic Signatures would acquire all Microba shares and options. Under revised terms announced by Genetic Signatures on 21 October, Microba shareholders would hold 60% of the combined group, while existing Genetic Signatures shareholders would hold 40%.

Requested orders could reshape the approval process

BCAL is seeking interim orders that would prevent Genetic Signatures from executing the scheme implementation deed unless it includes an appropriate fiduciary-out. It also wants Resolution 4, the resolution seeking shareholder approval for the issue of securities to Microba under ASX Listing Rule 7.1, withheld from the annual general meeting, adjourned, or treated as having no effect if passed.

As final relief, BCAL wants a fiduciary-out included in the deed and, if the transaction proceeds, a separate general meeting of Genetic Signatures shareholders. It is also seeking additional disclosure and an independent expert’s report on the proposal, or alternatively a 28-day period between publication of an expert report commissioned by Microba and the separate meeting.

The Takeovers Panel has stressed that it has not appointed a sitting Panel and has made no comment on the merits of BCAL’s allegations. That leaves several immediate uncertainties for the merger: whether proceedings will begin, whether interim orders will be issued, and whether the transaction documents or shareholder timetable will need to change before approval is sought.