Biogen Idec has maintained silence as even as details are revealed about the deal between Elan Pharmaceuticals and Johnson and Johnson. Details that will greatly impact the company's Tysabri franchise. Many believe provisions of the arrangement block any competition J&J may run into if it decides to bid for Biogen. And as Reuters reports, if J&J can cut the competition, it can also cut its bidding price for the biotech.
Under the Biogen-Elan deal, either developer has the right to purchase the other partner's stake in Tysabri if there is a change of control at either company. Under the J&J-Elan deal, J&J has the option to finance Elan's acquisition of Biogen's rights to Tysabri in the event of a change of control at Biogen, which gives J&J the upper hand if there's a bidding war. "This does suggest it reduces the value of Biogen by some billions," said Samuel Isaly, managing partner at OrbiMed Advisors, which holds stock in Biogen, Elan and J&J. "It's a muddy situation but on balance I'm less happy."
But analysts speculate it's unlikely that activist investor Carl Icahn (who has been pushing for a Biogen sale for some time) or Biogen's other stakeholders will keep silent for long. In fact, some anticipate a lengthy legal battle. "I expect they are going to litigate this until they're blue in the face," Larry Feinberg tells Reuters, who runs Oracle Investment Management, which owns Biogen shares. "Biogen can't just sit there."
- here's the Reuter's report