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Metaphors and M&As

I am a man who likes metaphors.

Perhaps too much.

I don’t get to cut loose much on that front in the magazine, but I’m feeling a little more casual here at the blog, so let me give you my metaphorical take on the two big merger-and-acquisition (M&A) situations going on right now: sanofi-aventis’ bid to woo (or take over) Genzyme Corp. and on the other end of the spectrum, Johnson & Johnson and Crucell both looking to get hooked up.

Many have said that the sanofi/Genzyme situation is a game of chicken. I don’t like that. In a game of chicken, someone’s going to get run off the road, and this seems more like each party trying to get as much as it can, not ruin the other person. So, that also takes my initial metaphor of two gunslingers facing off in a dusty street off the table, because no one’s out to destroy anyone. And I myself have used the staring contest metaphor, except that there’s not much action in that game.

No, I think perhaps it’s an arm wrestling match. Each side is exerting effort to shore up their case and enhance their position, and right now, neither side can pin the other’s arm down to the table. So, we just have to wait to see who does, or if someone calls a tie.

As for the J&J/Crucell situation, I liken that to a couple of lovers making eyes at each other and officially becoming engaged. Most of their friends and family (analysts and investors) like the idea of them getting together and think they’ll be quite happy, but a few close relatives are saying, “Maybe you shouldn’t walk down the aisle unless he buys you a bigger diamond ring or a house or something.”

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September 21, 2010 Posted by | Corporate, M&A activity | , , , , | Leave a comment

J&J and Crucell…But wait, there’s more!

If the recent action with sanofi-aventis and Genzyme has taught us anything (in the several articles on this blog and our website), the announcement of a potential merger or acquisition often means the beginning of protests and confusion. Get ready for another one of those rides, perhaps. Within hours of the announcement by Johnson & Johnson and Crucell that that latter is on the part toward becoming a vaccine division of the former, at least one Crucell investor is waving a red flag.

Today, on the heels of the announcement that Crucell and J&J were in the advanced process of negotiations for the shares of Crucell that J&J doesn’t already own for $2.3 billion (click here to read the story on our website), Crucell’s second-largest shareholder, private investment company Van Herk Groep, is chiming in with some serious reservations.

As Gertjan van der Baan, a director of Van Herk says, the offer to buy the rest of the Dutch company is too low and has come too early, and he calls the EUR24.75-per-share proposal (roughly $32.30 per share) “meager.” However, he declined to say whether Van Herk will tender its shares, saying that he will wait for the formal offer.

Van Herk Groep has a 9.6 percent stake in Crucell to J&J’s 17.9 percent, making its voice a pretty loud one. Van der Baan told Dow Jones Newswires that he thinks Crucell is in a transition phase and has the revenue potential of a biotech company along with the low risk profile one tends to see in other pharma companies.

On a more positive note, Jack Jonk, head of equities at Delta Lloyd Asset Management—which owns between 4 percent and 5 percent of Crucell’s stock—says the proposal seems to be a move “in the right direction” and one that makes sense strategically.

“But it’s to early now to assess [the bid] so we’re going to take our time to study it,” he said.

One thing that analysts seemed united on is the low potential for any bidding war over Crucell, in part because J&J already owns such a significant chunk of the company.

About a year ago, J&J paid $443.5 million for the nearly 18 percent stake in the Dutch biotech, and the two companies also forged a pact at that time, initially concentrating on advancing a universal flu-mAb antibody that can treat and prevent all influenza A strains, including swine and bird flu. Long-term strategies at the time were to develop a universal influenza vaccine as well as monoclonal antibodies and vaccines directed against up to three other infectious and non-infectious disease targets.

“Despite significant advances in prevention and treatment, influenza remains a major health threat, and each year, vaccines must be formulated to address the current influenza strain,” Paul Stoffels, the global head of pharmaceuticals R&D at Johnson & Johnson said at the time. “A universal antibody or vaccine that protects against a broad range of strains would be an important advance in helping doctors and nurses manage the annual influenza season and control acute epidemic and pandemic outbreaks.”

September 17, 2010 Posted by | Corporate, M&A activity | , , , , | Leave a comment