After launching in Vancouver nearly 20 years ago, Zymeworks is looking to shave a few dollars off its tax bill, announcing plans to become a Delaware corporation.
The relocation of sorts, referred to by the company as the “redomicile” in a disclosure Friday, capitalizes on Delaware’s cushy corporate environment to both reduce costs and increase potential investment. Delaware does not require that a company’s physical location be based in the state, so an outpost there can operate as a holding company for assets or revenues that will be taxed less than where a company actually does business.
In a statement, Zymeworks CEO Ken Galbraith said the decision is, “the right strategic move to align with both our current and prospective U.S.-based shareholders and our future operational structure.” He added that the company will retain a presence in Vancouver, focused particularly on early R&D work. Nearly half of the company’s employees and all but one of its independent directors live in the U.S., the CEO explained.
The move isn’t a done deal yet. The company will first need two-thirds of security holders to approve the strategy in addition to the green light from the New York Stock Exchange and the Supreme Court of British Columbia. The new Delaware corporation, which is expected to be finalized in the fourth quarter of 2022, will be referred to as “New Zymeworks,” though the company will keep its branding and stock exchange ticker.
The latest strategy follows a tumultuous last couple of months for Galbraith and the company’s board after activist investor All Blue Capital made a $773 million bid to buy the company in May. Galbraith rejected the move, calling it “opportunistic.” The offer followed an ongoing tit-for-tat over corporate decisions that All Blue felt were deteriorating value in the company, including the biotech’s public offering of more than 11 million shares earlier this year at $8 per share.
Ultimately, Zymeworks laid down the hammer, instituting a “poison pill” policy last month, which makes it more difficult for shareholders to amass a larger cut of a company.