The Charlotte, North Carolina-based company told shareholders it had entered into an agreement with privately held Sonnet that will see the biopharmaceutical company become majority owners of Chanticleer’s stock.
Chanticleer will spin out its existing restaurant operations into a new entity owned by shareholders of the burger company, with a listing expected soon after. The current listed company will operate under the Sonnet name with a proposed ticker symbol of “SONN” subject to shareholder and regulatory approval.
The surprise merger comes after a thorough review of Chanticleer’s current operations and strategic alternatives, according to Chanticleer’s CEO Mike Pruitt.
“The decision by our management and board to choose Sonnet to be our merger partner will allow our shareholders to participate in a dynamic company with a robust pipeline, backed by a sizeable commitment from an institutional investor to continue the development of the drug candidates.”
Pruitt told shareholders that Chanticleer’s executive team continues to be optimistic in the direction of its Better Burger business and the success of its numerous initiatives to enhance delivery, technology, customer loyalty and internal corporate culture.
The spinoff company’s platform will have a balance sheet and overhead structure which is better suited for a growing restaurant company, Pruitt said.
'Exciting next step'
As for Sonnet, a clinical stage biotechnology company with a pipeline of therapeutic compounds, the merger is an “exciting next step” in advancing its novel oncology product candidates, the biotech company’s CEO Pankaj Mohan said in a statement.
Sonnet’s lead drug is the proprietary FHAB (Fully Human Albumin Binding) technology that utilizes a fully human single chain antibody fragment linked to either one or two therapeutic molecules capable of affecting targeted single- or bi-specific mechanisms of action.
Princeton, New Jersey-based Sonnet also has a pipeline of new compounds and products that are expected to proceed to clinical trials next year.
Under the terms of the proposed deal, Sonnet’s shareholders will hold nearly 94% of Chanticleer’s stock, while Chanticleer’s shareholders prior to the merger will retain ownership of the remainder.
The spinoff company will receive a five-year warrant to purchase approximately 2% of Chanticleer shares at the completion of the merger at a price of US$0.01 per share.
Sonnet will also pay Chanticleer $6 million cash to settle the restaurant firm’s outstanding debt, with any remaining balance to be retained by the spinoff company.
Chanticleer will change its name to Sonnet BioTherapeutics Holdings Inc under the leadership of Pankaj Mohan, who will take on the chairman and CEO role of the newly combined company.
Shares of Chanticleer shot 45% higher in afterhours trading in New York at US$1.20.
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