IHS Global Insight Perspective | |
Significance | The deal put forward by Biogen Idec is at US$14.50 per equity share, which puts the total price tag for Facet Biotech at close to US$355 million. However, it has to be noted that Biogen's previous bids, at the higher US$15 per equity share, were rejected by Facet's board of directors. |
Implications | The aggressive pursuit of Facet was first signalled last month, when Biogen made its offer. But the two firms have enjoyed a licensing alliance since 2005, indicating Biogen's interest in Facet's pipeline, which has only strengthened with time. |
Outlook | Given the lower bid, Facet's board is unlikely to endorse this new offer. However, Biogen is expected to create problems for the recently concluded US$200-million deal between Facet and Trubion Pharma (U.S.), noting that such strategic transactions during acquisition discussions should not have taken place. |
Biogen Idec (U.S.) has made public its proposal to acquire all outstanding shares of Facet Biotech Corporation (U.S.) for US$14.50 per share in cash. The firm published details of a letter sent to the board of directors of Facet making a case for the transaction that it made "compelling business sense for both companies". Biogen has emphasised that the price bid is a 64% premium to Facet's closing share price on 3 September 2009. If the proposal goes ahead, the total financial consideration for the deal would be at US$355 million at the given price per share. In a press statement, Biogen noted that the proposal is not subject to approval by its own shareholders, and has requested a meeting with Facet's board of directors indicating it would like to expedite the transaction quickly.
The sequence of events before this latest deal indicates the potential for a hostile takeover transaction is growing. Indeed, in the letter to Facet's board, Biogen begins by noting that the US$200-million licensing agreement between Facet and Trubion Pharma (U.S.) made in the last week of August 2009 was disappointing. The rationale behind this disappointment is the fact that Facet rejected Biogen's first bid of US$15 per share made on 17 August, and promptly went ahead to sign the deal with Trubion. Furthermore, Biogen has noted that the collaboration with Trubion reduced Facet's value, as the stock price plunged 22% following the announcement of the deal. This eventually led to Biogen's offer at a new, lower price for Facet.
Outlook and Implications
It appears that the negotiations between Biogen and Facet for a potential acquisition by the former may have stalled following the announcement of the Trubion deal. The specifics of the deal include a payment of US$20 million upfront, and up to US$176.5 million to Trubion Pharma to co-develop the latter's experimental candidate, TRU-016. The candidate is currently in Phase I clinical trials as a potential treatment for chronic lymphocytic leukaemia. It is also known that Facet Biotech is picking up a stake in Trubion Pharma, and has invested US$10 million. This is not the first time that Biogen has expressed interest in Facet. The two firms struck a deal in 2005, collaborating on a co-development deal for daclizumab for multiple sclerosis, and volociximab for solid tumours. Since then, it is believed that the U.S. biotech firm has been seeking to expand this alliance.
The lower offer was made by Biogen reflecting on the apparent investor activity that led to a 22% fall in Facet's stock price. The firm believes that the value of Facet has been potentially diminished by the Trubion deal. However, despite the fall in the stock price, Facet's board of directors are unlikely to endorse this new bid. Over the ensuing weeks, a public takeover battle is expected to be kick started. Biogen is expected to pursue all opportunities in securing this acquisition, including approaching Facet's shareholders directly to acquire additional shares. It is also likely that Biogen could increase the offer if negotiations between the two firms are amicable.