Vanda adopts 'poison pill' after rejecting Future Pak's offer

By Sriparna Roy

(Reuters) -Vanda Pharmaceuticals on Wednesday rejected a takeover proposal from Future Pak and adopted a shareholder rights plan to reduce the likelihood of a hostile takeover.

Shares of Washington, DC-based drugmaker jumped 37.78% to $5.58 but were still trading below the offer price of $7.25 to $7.75 per share in cash.

The bid represents a 79-92% premium to Tuesday's closing price of $4.05.

The drugmaker said its board, along with independent financial and legal advisers, had concluded that Future Pak's offer, a privately held contract manufacturer and packager of pharmaceutical products, significantly undervalued the company and was not in its best interest.

The company has adopted a shareholder rights plan, known as a "poison pill", to prevent any entity from acquiring a stake of more than 10% without the board's approval.

The one-year-long rights plan will enable shareholders to "realize the full value of their investment," it said.

"We believe our offer for Vanda's outstanding shares is fair and represents a significant premium for shareholders," a spokesperson for Future Pak told Reuters.

Future Pak had also reiterated its intention to explore ways to improve the offer.

In its letters to Vanda, Future Pak had expressed a willingness to explore various ways to provide shareholders with additional upside beyond the stated cash consideration.

(Reporting by Sriparna Roy in Bengaluru; Editing by Tasim Zahid)