UPDATE: Facet Rejects Biogen Tender, Gets Third-Party Interest
October 01 2009 - 12:22PM
Dow Jones News
Facet Biotech Corp. (FACT) told shareholders not to tender their
holdings for Biogen Idec Inc.'s (BIIB) $356 million takeover offer
and disclosed that it has received inquiries from third
parties.
Biogen launched the tender offer last week, but cash-rich Facet
continues to argue that the $14.50-a-share offer doesn't put much
value on its product pipeline and operations. Facet contends that
Biogen is trying to cheaply acquire the full rights to daclizumab,
a multiple-sclerosis treatment in development by the companies.
"We absolutely believe that the price put on the table was not
an offer that appropriately values the assets and the long term
prospects of the company," Facet Chief Executive Faheem Hasnain
said in an interview.
Shares of Facet recently traded up 1.8% to $17.60; while Biogen
dropped 1.5% to $49.75.
In a filing with the Securities and Exchange Commission
Thursday, Facet said that it has received "inquiries from third
parties that could lead to offers being made for all or a portion
of the shares or the company's assets."
Facet declined to provide further information on those
discussions, but noted that it may enter into confidentiality
agreements with one or more parties in the process.
The company also stressed that it is not currently in talks with
Biogen Idec about coming to a deal.
A Biogen spokeswoman said the company is reviewing Facet's
filing and declined further comment.
Facet's stock has traded above the $14.50 bid since the offer
became public last month, an indication that investors are
expecting a deal to come at a higher price.
Facet has adopted a poison-pill plan to prevent a hostile
takeover attempt, but Wall Street analysts project Biogen taking a
friendlier approach and raising its offer closer to $20 a share in
order to close the deal.
The shareholder-rights plan prevents any person or group from
acquiring more than 15% of Facet's common stock without board
approval.
"Given where are our shares are trading [Thursday].... I would
be very surprised if there were many shareholders biting on that
offer," Hasnain said.
Hasnain, who formerly served as head of Biogen's oncology and
rheumatology business unit, said that Biogen's offer is
"opportunistic" in relation to the companies' decision to start a
phase 3 trial for daclizumab and its intimate knowledge of the
program.
"Both companies know that daclizumab is a very interesting
asset, so from that perspective this is not a surprise," Hasnain
said.
He noted that Facet has no change of control agreements in
commercial partnerships, so "any potential acquirer is free and
clear to jump into our shoes."
Biogen and Facet have worked together since 2005 on treatments
for multiple sclerosis and solid tumors, but Biogen went public
with its interest in buying Facet last month after Facet rejected
earlier takeover approaches.
In August, Biogen Chief Executive James Mullen called Hasnain
and referred to its inital $15-a-share offer as a "starting point
for negotiations," according to a SEC filing.
After the first rejection, Mullen asked Hasnain to propose a
price for a deal, but Hasnain declined to do so.
Facet has refused to allow Biogen, or any other company, to
perform due diligence unless a "bona fide" higher offer
materializes.
In a twist, Facet said that Biogen board member Alex Denner,
managing director of Icahn Partners LP who gained his board seat in
a proxy fight earlier this year, called Hasnain earlier this
month.
Denner wasn't immediately available for comment.
In the SEC filing, Facet states that Denner "repeatedly asked at
what price Mr. Hasnain would accept Biogen Idec's offer to acquire
the company."
Hasnain believes that Denner's call "just part of negotiations,"
but he responded that he wasn't in a position to name a price and
that any offer would be considered by the Facet board.
Facet was spun off from PDL BioPharma Inc. (PDLI) in December in
order to separate the company's biotechnology assets from its
royalty-producing assets. After the spinoff, Facet had $405 million
in cash to fund its operations for a number of years while it
attempts to develop its pipeline.
-By Thomas Gryta, Dow Jones Newswires; 212-416-2169;
thomas.gryta@dowjones.com