Gentium shareholders cry foul on $1B Jazz deal

As Jazz Pharmaceuticals ($JAZZ) rolls on with an orphan drug deal spree, shareholders of Gentium ($GENT), its latest target, are suing to stop the acquisition, saying the Irish company's $1 billion offer is far too low.

As Bloomberg reports, Gentium's investors say the Jazz deal is "hopelessly flawed," arguing that the company and its suitor orchestrated the transaction to benefit themselves and leave shareholders out in the cold. Jazz's offer clocks in at $57 a share, and Gentium's board, in accepting the pending deal, breached their duty to get the best possible price for its investors, according to the lawsuit.

Jazz and Gentium have both signed off on the deal and expect it to close this quarter, giving the irked shareholders a short window for disruption.

Central to Jazz's interest is Gentium's Defitelio, an orphan drug that treats the vein-blocking hepatic veno-occlusive disease. The treatment is already approved in the EU, and Jazz has big plans for commercialization and label expansion once it gets its hands on Defitelio. Gentium pulled an FDA application for the drug back in 2011 after the agency took issue with its supporting data, and Jazz hasn't said whether it plans to refile.

Jazz has been spending billions over the past few years to bulk up its pipeline of specialty drugs, looking to flesh out a narcolepsy franchise through a $120 million collaboration with Concert Pharmaceuticals and a deal with Aerial BioPharma worth up to $397 million. Meanwhile, the drugmaker remains a major M&A target in its own right, as analysts point to its promising stable of orphan treatments and the alluring benefits of Irish tax law.

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