Ribi son wants sale rejected

On Aug. 31, 1986, a small aircraft carrying renowned Hamilton scientist Dr. Edgar Ribi crashed into the mountains of northern Idaho. No one survived.

Exactly 13 years later, with a simple posting on the Internet, his son, Nils Ribi, urged shareholders to reject the sale of the company his father founded.

"Within one month his dream could also die as a result of the proposed sale of Ribi ImmunoChem to Corixa Corporation," Ribi wrote.

In June, the two companies announced a $56.3 million buyout plan - a deal that would give Ribi shareholders about $2 per share.

Brief details of the deal were included in a press release. Then the company went mum during what it calls a quiet period.

Without more information, shareholders have questioned the deal and started a movement to block the merger and replace the board of directors.

"Normally, with a merger announcement or such a significant event, you think they would lay it on the table," Nils Ribi said in an interview Tuesday with the Missoulian. "The only thing I've read is the public information. That's why it concerns me. The rationale behind the public documents doesn't make sense. I don't know what it is … maybe there's something behind the scenes we don't know about."

Nils Ribi was chairman of the company until 1989 when he resigned to run a venture capital firm in Sun Valley, Idaho.

Such fears weren't alleviated by a 3/4-inch proxy statement company officials sent to shareholders last week in hopes they will approve the buyout.

Despite the company's case for the merger, some shareholders believe Corixa is getting too good of a deal at $2 a share. About 1 1/2 years ago Ribi stock sold as high as $6.

What Seattle-based Corixa gets is a company with 18 years of research, cash and assets of about $14 million, a manufacturing plant in Hamilton and several drugs that are in various stages of development.

Besides the letter from Nils Ribi, D.A. Davidson on Tuesday warned its investors of the risks, but said the merger might be the best deal for speculative investors.

"Shareholders of Ribi ImmunoChem, a Montana biopharmaceutical company, have a dilemma," wrote senior analyst Jim Bellessa at the top of a research report. "Either they vote to approve a proposed merger into Corixa Corporation at what arguably is a depressed price, or they disapprove the merger and risk the stock price dropping below $1 for an extended period of time, triggering a delisting from NASDAQ."

Bellessa said a delisting might force the company to redeem its preferred stock, essentially draining the company's reserves and forcing an asset liquidation.

"With a shareholder vote slated for September 23, what should shareholders do?" Bellessa asked.

He outlined three options.

The first is sell the stock before a special meeting in three weeks. A yes vote on the buyout is by no means a done deal.

Shareholders led by Dr. Arthur Smith, a retired physician from South Carolina, and Lonnie Bookbinder, a former Ribi vice president, might have enough shareholders against the deal to kill it.

Admittedly, no one knows how shareholders will vote when it's time, but in early August the group against the deal, called United Ribi Shareholders, said they might have a 29 percent block of shares prepared to stop it.

"Twenty nine percent is a real soft number," Bookbinder quickly said when asked. "When you have a campaign like we're waging here, nothing is a hard number."

Bookbinder owns about 17,200 shares. Smith said he owns about another 218,000 shares. Nils Ribi, who has been silent until Tuesday's Internet posting, declined to disclose his holdings.

Regardless, a 29 percent no-vote might be difficult to overcome. To pass, more than 50 percent of the outstanding shares must vote in favor of the deal with Corixa. Any proxy not returned is considered a vote against the deal.

Analyst Bellessa said the second option for shareholders is to hold onto the stock and vote for the merger. He said Corixa is financially stronger and may be a good fit for Ribi's science. Together, the compani

es might have a better chance of winning regulatory approval of cancer-fighting drugs.

Corixa received a $50 million line of credit from an investment group headed by Microsoft chairman Bill Gates.

Furthermore, he noted, the proposed stock-for-stock exchange of 0.1685 shares of Corixa for each Ribi share has been declared fair by both Ribi's and Corixa's boards and their financial advisers.

The third option outlined by Bellessa, is to vote against the merger. Such a vote would likely be interpreted as a vote of no confidence in the board.

With a new board of directors, Bellessa said, the company could use its experience and patents to remain viable or solicit better takeover terms than the Corixa offer.

After reviewing the options, D.A. Davidson said the possible liquidation of the company is too great a risk and shareholders should vote for the deal.

Nils Ribi said the proposed buyout has been a disappointing chapter in the company's history.

"When my father founded Ribi ImmunoChem in 1981, his simple goal was to make better health care available through better products for man and animals," he wrote in his letter. "He felt the independent corporate route was a more efficient and effective way to bring these products to the market. It is unfortunate that his dream has become bogged down in true bureaucratic fashion in recent years.

"A new, lean, efficient and trusted Ribi ImmunoChem may revive his dream once again."