Facet Biotech: Open for bidding
Today's Financial News - Posted December 10, 2009
The biotech sector has been a hot one this year. That’s good news for the companies on the auction block and bad news for the bidders.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): There’s no doubt it has been a strong year for the nation’s biotech sector. The industry known for its wild, hair-raising rides is renowned for handing huge rewards to savvy investors… at least for those willing to take the risk.
To be certain, if your goal was to beat the markets in 2009, the biotech sector was the place to do it. Unless something dramatic happens between now and the end of the month, biotechs will have outpaced the broader markets nearly two to one over the past twelve months.
The S&P is up 18% year-to-date, while the biotech sector (according to the AMEX Biotech Index) is up by a whopping 39%.
That kind of figure is good news for Facet Biotech (NASDAQ:FACT) as it mulls its future.
Since September, Biogen Idec (NASDAQ:BIIB) has had its eye on a Fact takeover. Its first offer of $14.50 per share was promptly rejected. And now we are receiving word that the company’s second tender offer of $17.50 has been unanimously rejected by the company’s board.
More money, please
According to the letter released to shareholders this morning, Fact’s top brass believes Biogen’s offer significantly undervalues its product pipeline and overstates its liabilities.
What’s even better for investors, however, is the fact that the board is essentially putting a for sale sign on the company’s shares. “Beat this price and we’re yours,” their actions say.
The news is good for share price. As I write the stock is up by nearly three percent, surpassing Biogen’s tender price by nearly forty cents.
What comes next?
It’s a wait-and-see game for shareholders. Obviously executives are expecting (or at least hoping) for a knock at the door from Biogen’s rivals. If a better offer comes, today’s investors could have a nice play on their hands.
But if the phones don’t ring and Biogen remains the sole bidder, even the current $17.50 offer could be in jeopardy. After the year we’ve had, anything is possible. The threat of a double-dip remains strong.
According to today’s action, the Street is not confident of a bidding war anytime soon. A moderate increase in share price indicates the big bidders believe another offer, only slightly larger, will come from Biogen.
Only time will tell.
Next Article: Global Markets Review – Outlook 2010
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