Now that Amylin and Human Genome Sciences have completed their buyout deals, the biotech industry is virtually humming with gossip about the next sizable buyout. The market buzz, which sometimes seems to include about every moving target in the industry, has helped push up biotech stock values across the board. And after crunching the numbers, Reuters analysts report that the biggest institutional investors active in the field are sitting pretty, ready to snap up offers which are now likely to trigger a windfall return.
In making its case, Reuters decided to review the prospects for 6 biotechs selected by Morningstar as likely takeover candidates: Alexion ($ALXN), BioMarin ($BMRN), Onyx ($ONXX), Regeneron ($REGN), Seattle Genetics ($SGEN) and Vertex ($VRTX).
In a number of cases, says Reuters, it's clear that the big investors--including the likes of Wellington Management, Fidelity Management & Research, Capital Group Cos and T Rowe Price Associates--snapped up shares in some of these companies at only a fraction of their current value. A buyout premium could be worth an added fortune.
Why is that important? Institutional investors which own a significant chunk of any company's stock are powerfully persuasive when it comes to closing a deal. If they're looking at a big windfall, you can expect to see them back a buyout. Human Genome Sciences ($HGSI) held out for months trying to wrest a better offer from GlaxoSmithKline ($GSK) or a potential white knight. And the Reuters analysis shows that the final, disappointing figure likely left some of their biggest investors short, which couldn't have made the final $14.25 per share offer easy to accept.
The market environment is likely to propel more deals in the months ahead, leaving investors at the edge of their seat as they watch one of the most interesting games on The Street.
- here's the analysis from Reuters