Graphite Bio, Inc. (NASDAQ: GRPH) experienced a relatively uneventful trading day on Friday, with its stock showing a marginal increase of 0.32%. However, after the closing bell, the stock saw a remarkable surge of nearly 24% in the after-hours session, catapulting its price to $3.89.
This unexpected movement in GRPH’s stock appears to be closely tied to a significant development—the announcement of a special dividend in relation to a proposed merger.
Strategic Shifts and Merger Announcement
Graphite Bio, historically known as a clinical-stage gene editing company, made waves in February 2023 when it decided to discontinue the development of its lead product candidate for sickle cell disease, nulabeglogene autogedtemcel. Instead, it initiated a strategic review process aimed at maximizing shareholder value from its assets and cash resources.
With insiders owning over half of the company, GRPH’s Board of Directors declared a special dividend in connection with its planned merger with Lenz Therapeutics, Inc. The merger, as per the Agreement and Plan of Merger dated November 14, 2023, aims to position the combined entity for enhanced growth and value creation.
Details of the Special Dividend
The special dividend, estimated at $1.03 per share of Graphite’s common stock, will be disbursed in cash to stockholders of record as of March 18, 2024. The payment date is set for March 21, 2024, subject to adjustments outlined in the Merger Agreement.
The dividend, capped at $60 million, hinges on the successful completion of the merger, pending approval at the special meeting of Graphite’s stockholders scheduled for March 14, 2024.
Investor Opportunities and Considerations
The proposed merger with Lenz Therapeutics presents investors with significant potential upside, particularly with Lenz’s promising late-stage pipeline, including a groundbreaking drug targeting near vision reading problems. The merger is expected to bolster the company’s financial position, with most shares post-merger held by insiders.
Investors eyeing the special dividend should note that owning GRPH shares two days before the record date allows eligibility for the dividend, without affecting their original holdings. This cash dividend represents investors’ share of profits from the merger, offering an attractive incentive amid the anticipated growth prospects.
Conclusion
In conclusion, Graphite Bio’s after-hours surge and the accompanying special dividend announcement underscore the company’s strategic evolution and the potential value creation anticipated from its merger with Lenz Therapeutics. As investors await the outcome of the merger vote, the prospect of dividends and future growth opportunities positions GRPH as a stock to watch in the coming days.
