Novo Nordisk pursues 2.6-billion euro takeover of Ablynx, although offers so far rebuffed

Novo Nordisk disclosed Monday that it made an offer to acquire Ablynx for 28 euros ($33.59) per share in cash, as well as a contingent value right (CVR) of 2.50 euros ($3.00) per share, representing a total equity value of around 2.6 billion euros ($3.1 billion). However, Novo Nordisk noted that Ablynx's board has so far declined to engage in discussions regarding a takeover.

On Monday, Ablynx said that its board concluded that the proposal "fundamentally undervalues" the company. Ablynx CEO Edwin Moses explained "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."

According to Novo Nordisk, on December 7 last year, it made an initial proposal to acquire Ablynx for 26.75 euros ($32.09) per share in cash, although the bid was rejected on December 14. Later that month, Novo Nordisk submitted the revised offer, which was rebuffed by the Belgian company on December 23. Novo Nordisk noted that on January 5, CEO Lars Fruergaard Jørgensen spoke to Moses to encourage the parties to enter talks around key value drivers, although this offer was also rejected.

Novo Nordisk's offer represents a premium of up to 60 percent over Ablynx's share price on the day before the first bid was submitted. The proposal includes a CVR linked to two other experimental drugs, with a payment of 0.50 euros ($0.60) per share linked to Ablynx's partner for vobarilizumab electing to exercise its opt-in right to license the drug candidate following completion of the ongoing Phase II STEADY trial, while a further 2.00 euros ($2.40) per share is contingent upon initiation of a Phase III study for ALX-0171.

"The proposed transaction with Ablynx represents a compelling opportunity for both companies and is in the best interests of all of Ablynx's stakeholders," remarked Jørgensen. The Danish drugmaker said that a deal would allow Ablynx's experimental drug caplacizumab to become part of its existing haematology franchise, benefiting from its "extensive worldwide resources."

"Novo Nordisk intends to use its full suite of regulatory, scientific and marketing expertise to complement the existing strong management and medical team at Ablynx in order to optimise the development and global commercialisation of caplacizumab," Jørgensen added. In February last year, Ablynx submitted a filing to the European Medicines Agency seeking approval of the anti-von Willebrand factor Nanobody for the treatment of acquired thrombotic thrombocytopenic purpura. 

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In 2015, Novo Nordisk entered a research collaboration with Ablynx focused on the latter's Nanobody platform. The Danish drugmaker indicated that if it buys Ablynx, it would continue to invest in the Nanobody platform and support its people and activities, including existing partnerships, while the latter's site in Ghent, Belgium would become part of Novo Nordisk's R&D organisation.

Novo Nordisk is seeking to expand beyond its core area of diabetes, with Jørgensen keen to enter rare disease markets where drugs command high prices. "I think it would be natural to update the bid following a detailed discussion with the board of directors of Ablynx," commented Novo Nordisk chief financial officer Jesper Brandgaard, adding that the potential transaction "marks a higher risk willingness and a willingness to obtain innovation from outside Novo Nordisk." Brandgaard also played down the threat of competing bids, noting "in terms of counter proposals it is not our understanding that any other bidder is pursuing the target."

Jefferies Group analyst Peter Welford suggested that Ablynx could be worth as much as 36 euros ($43.15) per share if all the outcomes included in the CVR that Novo Nordisk offered are successful. "We envisage Novo [Nordisk] needing to hike the offer and could see counter-bids," Welford added. Meanwhile, analysts at Credit Suisse named Bayer, Novartis, Shire and Sanofi as all having assets that would make Ablynx a good fit.

For related analysis, see ViewPoints: Ablynx confirms pluses outweigh minus for caplacizumab in aTTP.

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