Novo Nordisk has gone public with its €2.6 billion ($3.1 billion) bid to acquire Ablynx. The Danish company had two takeover offers rejected by Ablynx last month, prompting it to go public with its intentions to dial up the pressure on its target.
That has put the events of last month into the public domain. Novo originally approached Ablynx with a €26.75-a-share offer. When Ablynx rejected that, its pursuer returned with an offer that ramped up the per-share fee to €28.00 and added up to €2.50 a share in potential payments tied to the success of vobarilizumab and ALX-0171. That is the €2.6 billion bid disclosed by Novo.
Novo CEO Lars Fruergaard Jørgensen called his counterpart at Ablynx, Edwin Moses, on Friday but was unable to persuade the company’s board to open discussions about a deal, according to the Danish firm. That prompted Novo to go public with its takeover aspirations.
The attempted takeover is the first major, publicly-disclosed acquisition attempt of Jørgensen’s stint as CEO. Jørgensen inherited a business that had sat out previous bouts of M&A while growing big on its diabetes franchise. But with the diabetes business coming under intense pressure, Jørgensen has decided his predecessor’s strategy is no longer the right way forward for the company.
Novo needs to source growth from beyond its internal pipeline to offset pressures on its key diabetes products, and has identified Ablynx as part of the answer to that problem. Buying the Belgian biotech would give Novo control of caplacizumab, a treatment for a rare bleeding disorder it sees slotting into its hematology franchise. Caplacizumab is closing in on approvals in Europe and, beyond that, the U.S. Analysts at Jefferies tip the product to rack up peak annual sales of $500 million.
The prospects of midphase IL-6R drug vobarilizumab and respiratory syncytial virus asset ALX-0171 are inherently less certain, hence Novo’s interest in making payments contingent on their success.
Novo has tried to sweeten the deal by committing to making Ablynx’s site in Ghent, Belgium, a key part of its R&D network. And by talking up the potential of pairing this innovation engine with its money, later-phase capabilities and commercial organization. The argument has fallen on deaf ears, though.
Ablynx, with its bank balance fat from an IPO and a drug nearing the market, is well positioned to hold out for a better offer. And its view that the current offer is too low is shared by some analysts.
“We view the base case €28/share to be a low-ball bid,” Jefferies analyst Peter Welford wrote in a note to investors.
Welford has a sum-of-the-parts valuation of €29 per share, which rises to €36 a share if Ablynx’s drugs pass some near-term milestones. Novo’s willingness to ramp its bid up toward that level will rest on how important it sees Ablynx to its future and on whether other potential buyers enter the race.
Novo currently thinks it is the only company in the running, Reuters reports. But as Ablynx is closing in on the introduction of a potentially very profitable rare disease drug and has relationships with a long list of large pharma companies, other bidders may come knocking.
In an update posted this morning, Edwin Moses, Ph.D., CEO of Ablynx, said: "After careful consideration, the Ablynx board of directors unanimously determined that Novo Nordisk's proposal is not in the best interests of the Company and its shareholders as it fundamentally undervalues caplacizumab, the Ablynx pipeline, platform, technology, people, and know how. The Board sees no merit in ceding control of its assets without full upfront value recognition for shareholders and believes the proposed consideration and a complex instrument like a CVR does not constitute a basis for further discussions at this time."