is displaying an independent streak that may make its namesake proud, but that may leave shareholders feeling sick.
The struggling company, named for outspoken former surgeon general
C. Everett Koop
, had talks with one suitor end Monday, when
said the companies failed to reach a merger agreement.
drkoop also is turning back advances from
, which has made two offers that were rejected and has another on the table. In fact, drkoop has taken a downright antagonistic tone when discussing Undertherapy's offer.
"drkoop.com and Undertherapy.com are not party to any agreement except for a standard confidentiality agreement which drkoop.com believes was violated by the actions taken by Undertherapy.com," drkoop said in a recent press release. "Undertherapy.com had previously been advised that any communications should be made directly to the board of drkoop.com or its advisors,
Bear Stearns & Co.
For reasons unknown to drkoop.com, Undertherapy.com chose to make public statements instead."
All this from a company that's hardly negotiating from a position of strength, given that drkoop is running out of cash and that its stock trades at 1 5/32. (It was off 16%, or 7/32, Monday.)
Josh Fisher, an analyst at
, says there are two possible reasons that drkoop is rejecting the deals: "These companies don't have enough capital or access to capital for drkoop. And there's the Dr. Koop factor. He has pretty much veto power."
Fisher adds, "I'm surprised they haven't been bought yet. They've got, I would say, weeks left." (Hambrecht hasn't done any underwriting for drkoop, and Fisher rates the stock neutral.)
drkoop declined to comment.
The company has had almost no good news for months.
In late March, it announced that its auditors were questioning whether it could continue as a going concern. Then in April, when it released its first-quarter financial results, the company said it had retained a financial advisor to explore strategic alternatives (as in, find a buyer), and that it had only a little more than four months of cash remaining at March 31.
In mid-July, drkoop said its second-quarter earnings would fall short of expectations and announced that its chief operating officer and chief financial officer resigned.
And drkoop also faces a shareholder lawsuit, filed July 14, claiming that it concealed the "going concern" warning it received from auditors on Feb. 15, and instead made optimistic statements about the company's prospects. The letter wasn't disclosed until March 30, and in the meantime company insiders sold 400,000 shares for proceeds of $4.5 million, the suit alleges.
Then, in what looked like good news, the takeover offers came. drkoop turned down Undertherapy's first two offers by saying they weren't in the best interests of shareholders. But since they're holding a stock trading for less than 2 a share, shareholders may disagree.