Acacia Research ( NASDAQ: ACTG ) stock gained 7.4% before the bell on Monday after it announced a deal with activist hedge fund Starboard Value to streamline its capital structure .
Jeff Smith's Starboard will invest over $245M in additional capital and convert its ownership interests in Acacia ( ACTG ) to shares.
Starboard will exercise its 5M series A warrants at $3.65/share, which will result in an ~11.5% stake in Acacia ( ACTG ) and an ~27.5% voting interest.
Acacia ( ACTG ) will conduct a rights offering in Q1 2023 at $5.25/share for all shareholders and Starboard has committed to buy at least 15M shares.
The firm will offer 0.25 new shares per outstanding share, with a maximum of over 38M shares.
Starboard will exercise its remaining ~31.5M series B warrants at $3.65/share (or ~$115M).
Once the above deals close, Acacia's ( ACTG ) capital structure will consist entirely of stock, eliminating $133.2M of derivative liabilities and $95M of debt and preferred stock obligations.
Starboard will receive $75M in total foregone option value payments in exchange for early exercise and early conversion of derivatives.
Acacia's ( ACTG ) cash and marketable securities will be at least $390M, with the potential for ~$122M in additional cash to be raised through the rights offering.
After the above transactions and the completion of Acacia's ( ACTG ) stock buyback program, the firm's pro forma book value is expected to be $5.37/share (or $534M), with adj. book value of $5.63/share.
Starboard partner Gavin Molinelli will be appointed chair of Acacia's ( ACTG ) board.
Acacia ( ACTG ) also said CEO Clifford Press will retire and its COO M.J. McNulty has been named interim-CEO. The board will conduct a search for a permanent CEO.
Earlier this year, Acacia ( ACTG ) made a bid to acquire Kohl's ( KSS ) for $64/share in cash, which was rejected .
For further details see:
Starboard Value to invest $245M in Acacia Research, stock gains 7% premarket