Shareholders of Brooklyn Center-based Medafor Inc. on Thursday decisively rejected a suitor's proposal to withhold support from the company's board after it turned down a takeover bid.
The Atlanta biomedical firm CryoLife Inc., which is Medafor's top distributor and shareholder, abandoned its $2-a-share cash and stock bid for the privately held company in March. The Medafor board dismissed it as "grossly inadequate."
But the two companies continue to duke it out in federal court, most recently over Medafor's decision to sever the distribution agreement between the two. CryoLife had also proposed withholding support for the five-member board, on the grounds that it "has overseen the destruction of Medafor's business, its technology and the value of its shares."
Shareholders who control roughly 70 percent of the company's shares voted by a 95 percent margin to re-elect the board.
At the center of the dispute is Medafor's unique blood-clotting powder, called HemoStase, which CryoLife distributes in the United States and in some markets abroad. But the legal status of that agreement is now unclear: A ruling by a federal district judge on the matter is expected soon. (While sales have temporarily lapsed in those markets as a result of the dispute, Medafor says customers will continue to be served after the ruling.)
At Thursday's meeting, held at the Northland Inn in Minneapolis, Medafor's CEO Gary Shope said the company's revenue in 2009 grew 40 percent to $13.8 million. He said trends in the business are strong through the first quarter of this year.
"The Medafor of today is a revitalized company," Shope said. "We've had a few bumps in the road, but we'll get through it."
The real problem for Medafor is the distraction and expense stemming from CryoLife's takeover bid and continuing litigation, Shope said. Had it not been for the $1.2 million the company shelled out for legal expenses last year, Medafor would have been profitable, he said.
