The pharmaceutical sector has had many successful merger and acquisition announcements come and go in the past couple of months. But for some companies, this has scarcely been a summer of love. A number of big pharmaceutical's offers have fallen short and been rejected, and some of these are still being played out. We are still waiting to see what the future holds for some of these proposed mergers and occasionally troubled collaborations.
BMS & ImClone
ImClone Systems rejected the hostile $4.5 million takeover bid from Bristol-Myers Squibb, calling the offer "inadequate". The BMS offer was for $60 per share in cash; On the 10th September ImClone said that another company offering $70 per share approached it. BMS currently holds a 17% stake in ImClone, and the two companies have collaborated together to develop and commercialize the cancer drug "Erbitux" (cetuximab). The CEO's of both companies have publicly exchanged letters disapproving of the other's management of the offer and dispute concerning the future of their collaborative product candidate "IMC-11F8". ImClone did, say the company would consider another BMS offer. On 16th September, Jean-Marc Huet, chief financial officer for BMS, said the company was prepared to walk from a deal with ImClone.
Sanofi-Aventis Europe & Zentiva
In late July 2008, Sanofi-Aventis Europe made an unsolicited bid for Zentiva, on 3rd September 2008, Zentiva advised shareholders to reject Sanofi-Aventis Europe's unsolicited offer. Sanofi already owns 24.9% stake in the company, making them the largest shareholder. Zentiva's board of directors said the offer of CZK 1050 per share ($63 per share), or 40 billion crowns ($2.39 billion) substantially undervalued the company. Jiri Michal, chairman of the board and CEO of Zentiva, said, "The board believes that this offer falls a long way short of reflecting Zentiva's fundamental value". On 18th September 2008, Sanofi extended this offer with an additional 10-week period until 28th November 2008.
Roche & Genentech
In late July 2008, Roche made an unsolicited bid for the remaining 44% of Genentech shares. The offer was for $89 per share, a deal worth $43.7 billion. On the 13th August 2008, Genentech announced its special committee of the board of directors concluded that $89 per share "substantially undervalues the company" which the board unanimously rejected. Genentech's special committee says it would consider another proposal. Industry analysts predict Roche may up the offer to $53 billion.
Sun & Taro
In early May 2008, a year on from the initial offer Taro Pharmaceutical Industries announced plans to terminate the merger agreement made with Sun Pharmaceutical Industries. In August 2008, Sun announced its victory over the litigation court case brought against it by Taro in the Tel-Aviv District Court, in which it rejected Taro's argument that Sun violated Israeli law by not conducting a "special tender offer". The State of Israel Supreme Court prohibited Sun from completing the tender offer to Taro shareholders until Taro's appeal hearing in the lower court. On the 3rd September Sun extended the initial offer of its tender buy one month to 3rd October 2008. According to a letter sent out to shareholders on the 10th September 2008, Taro Chairman Barrie Levitt says Sun's unsolicited tender offer is on hold until the Supreme Court's hearing of the appeal on the 8th December 2008. Since July 2008, Taro's board of directors said it was "financially inadequate" and a "sham offer", they have recommended to its shareholders not to accept the tender offer.
King & Alpharma
On 22nd August 2008 Alpharma (Bridgewater, NJ) rejected a $33 per share buyout from King Pharmaceuticals (Bristol, TN) a deal worth $1.4 billion. On 12th September, King commenced a tender offer to acquire all of the outstanding shares of Class A common stock of Alpharma for $37 per share in cash, or $1.6 billion. The tender offer is scheduled to expire on the 10th October 2008. The board of directors of Alpharma's have urged shareholders to take no action until it evaluates the tender offer and makes a recommendation to shareholders, this process should take no more then 10 business days following the commencement of the tender offer. Meanwhile, Alpharma said their boards were exploring other possibility to optimize shareholder value; this also includes a possible sale of the company to another company.
Harry Chen is a top analyst working at Paker Forrester Ltd, Co. For more articles by Harry Chen and the Parker Forrester financial team, please visit: www.parkerforester.net. Parker Forrester also has an RSS Feed found here:Parker Forrester Financial News RSS Feed.
