Under BBM’s proposal, BBM would acquire all of the outstanding shares of YMI common stock for consideration per share of $0.50 in cash plus 0.375 share of BBM common stock (aggregating for all YMI stockholders approximately 45% of the combined company’s outstanding stock after giving effect to the merger). The cash portion of BBM’s proposal represents a premium of 84.5% above the closing price of YMI common stock of $0.271 on November 12, 2008 (and a substantially greater premium taking into account the value of the BBM stock issued in the merger).

Alternatively, if YMI’s board of directors prefers not to negotiate a merger as proposed, BBM is willing to undertake a tender offer at a cash price of U.S. $0.60 per share for at least 90% of the shares of YMI Corporation.

BBM is a holding company that had formerly been operating in the telecommunications space but who can blame them for switching over to biotech.  There aren’t a ton of industries with literally hundreds of opportunities trading below their level of cash.

Additionally, it’s not like YM doesn’t have a growth driver, they are developing nimotuzumab, an epidermal growth factor receptor (EGFR)-targeting monoclonal antibody that it hopes will prove safer than marketed EGFR drugs such as Erbitux (cetuximab, ImClone). Their European partner (OncoScience) is already enrolling patients in a Phase III study in adult glioma patients, as well as in a Phase IIb/IIIa study in combination with gemcitabine in patients with advanced pancreatic cancer.

This is a tough call for YM; the BBM offer clearly undervalues the company but if their near term cash requirements exceed the ~$55M they have on hand, there might be little alternative.  We just saw Genelabs Technologies agree to a similar deal from GSK.  They were picked up for a little less than half cash on hand.

For big pharma/biotech… and er… holding companies, small companies are fish in a barrel.

BBM Announces Offer to Acquire YM BioSciences for US$29 Million; YM BioSciences Believes Offer to be too Low but will Present to Board
-(Via BioSpace.com Featured News and Stories.)

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GlaxoSmithKline, looking to shore up their hepatitis C pipeline, announced that they have entered into an agreement with Genelabs Technologies for approximately $57 million (£35 million) through a tender offer of $1.30 per share in cash.

GlaxoSmithKline to acquire Genelabs Technologies to increase focus on novel small molecule therapies for Hepatitis C
-(Via GSK news.)

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Either, the rumor mongers who keep this Pfizer/Bayer rumor alive lack common sense or Pfizer does.

Bayer Shares Rise On Pfizer Bid Rumors (Yahoo/Reuters)
Hat tip to Ed at Pharmalot

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Novartis will acquire research, development and manufacturing assets of Nektar’s pulmonary business unit, including tangible assets as well as intellectual property and related expertise.

Important capabilities gained from Nektar, which has approximately 140 associates who will join Novartis and remain in San Carlos, California, include product formulation and delivery expertise along with a broad device platform. This transaction excludes Nektar’s inhalation programs for insulin, vancomycin, ciprofloxacin and amikacin.

Novartis will utilize these skills to build on existing capabilities and accelerate its pipeline targeting life-threatening diseases such as chronic obstructive pulmonary disease (COPD), asthma and cystic fibrosis as well as the life-cycle management of late-stage development projects that are closer to regulatory submissions. Potential applications will also be assessed in other areas of the Novartis healthcare portfolio.

Novartis to acquire Nektar Therapeutics pulmonary business unit
-(Via Novartis Media Releases.)

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I guess the Swami was right.

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Swami: No problem.  Shouldn’t take too long.  Let’s see what we have here….

[I assume his eyes gaze through the wall, focusing on the distant horizon.  It's hard to tell since this isn't a video conference but the Swami has a flair for the dramatic.]

… yes, yes.  It’s getting clearer. I’ve got it, but you’re not going to like it.

Me: Try me.

Swami: Eli Lilly buys ImClone.

Me: Way to go out on a limb, Swam

Swami: What do you want me to say?  Did you think there would be a vicious bidding war between a few major players, ending with an +$80/share price?  You must be confusing big pharma with a flock of irrisponsible sheep.

Me: Well, what about Pfizer?  They’re sitting on almost $30B in cash, an inadequate pipeline and an itchy trigger finger to do… something.

Swami: Pfizer is laying off employees and is in the midst of the largest cost cutting effort in their history.  They are slimming down.  They are shooting for lean and hungry, not more bloated and stuffed.  I’ll ask you, is now the best time to spend over $6.1B on one approved drug and small handful of clinicla stage drugs, some of which they might not fully control?

Me: Fine… but you had to at least consider Bristol-Myers Squibb, right?

Swami: Of course, I considered BMS.  The fact is, even if they had cash to compete with a Lilly offer in the mid 70’s, the recent communication between the two companies have been contentious as best. Not the best way to begin a merger, wouldn’t you say?  By the way… bit of negotiating advice… don’t burn bridges until you’ve crossed them and have no intention of going back.

Me: Well, im kind of… dissapointed.  I wanted fireworks.

Swami: I don’t know what to tell you, kid.  I call ‘em like I see ‘em.  This isn’t a movie; the guy doesn’t always get the girl.  Anyway, I’ve gotta’ go, my 12:30 is here.  Call me mid-09 after the market has calmed down a bit.  You, me and Obama will play a quick nine at Congressional.

[Click. Phone cuts off]

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Investing, ultimately, is about alternatives.  Why invest in the stock market if you can get 10% in a savings account?  Should a company build a new plant in Singapore or retrofit an already established plant in Germany?  The answers to these questions are not always easy but invariably, alternatives are considered.

I ask you, mystery suitor: Is this really the best use of your $6.1B in cash?

While buying ImClone, splitting the revenue of Erbitux with Bristol-Myers Squibb and dropping tens of millions on legal fee’s for control of IMC-11F8 sounds sarcastically attractive, are you sure this is the best use of your capital.  Buying ImClone may be a good investment, just not the best alternative investment.  There is a subtle but important difference.

How about taking a stake in 20 innovative start-ups or licensing 100 promising compounds or buying 2 other midsize companies you already share revenue with?  The possiblities are many.  Explore them.

I’m sure that the mystery managment team already knows this.  I’m sure all of the 100, ivy league MBAs in upper managment has calculated the NPV of each potential project and managed the risk/reward profile of each senario but riddle me this: four months ago, was ImClone on your radar screen?  Did the aquisition make sense before the angry letters and accusations starting flying?

If not, move on.

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“Mr. Icahn also announced he has had several conversations with the Chief Executive Officer of a large pharmaceutical company. As a result of such conversations, the pharmaceutical company has submitted a proposal, subject to due diligence, but not subject to financing, to acquire ImClone for $70 per share in cash. The Special Committee has determined, subject to the execution of a confidentiality agreement, to allow this company to conduct due diligence for a two week period, subject to extension by mutual consent. No determination has been made as to whether $70 per share would be adequate.”

This sage keeps getting better and better. Honestly, I doubt another company will drop $7B in cash for ImClone for a share of Erbitux and the potential legal fight over the back-up. In fact, at $7B in cash, BMS and one or two others might be out of the running entirely.

What’s your guess?

Pfizer
GlaxoSmithKline
Sanofi-Aventis
AstraZeneca
Merck
Novartis
Johnson & Johnson
Roche
Eli Lilly & Co.
Wyeth

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Shionogi will acquire all the outstanding shares of Sciele’s common stock at a price of $31 (67% over yesterday’s close), for a total equity purchase price of approximately $1.1 billion. Upon completion of the acquisition, Sciele will become a wholly-owned subsidiary of Shionogi and will continue operations in Atlanta, GA, USA as a standalone business unit.

The acquisition of Sciele provides Shionogi with an immediate expansion in the U.S. market, significantly increasing Shionogi’s commercial presence and product pipeline in the United States.

- Biospace

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The Alpharma reponse letter is included below:

Mr. Brian A. Markison
Chairman of the Board,
President and Chief Executive Officer
King Pharmaceuticals, Inc.
501 Fifth Street
Bristol, Tennessee 37620

Dear Mr. Markison:

Our Board has received your letter, which you also made public earlier today, outlining King Pharmaceuticals’ unsolicited, non-binding proposal to acquire Alpharma for $33.00 per share in cash.

As you know, since you first approached me in July expressing King’s interest in a potential acquisition of our Company, I indicated, even as late as this week, that while Alpharma is not for sale and we are encouraged by our future prospects, we would consider seriously any bona fide proposal that reflected the fair value of our Company.

You have now made three non-binding acquisition proposals, including today’s, all at the price of $33.00 per share. In consultation with its financial and legal advisors, our Board of Directors has carefully reviewed your proposals over the course of several meetings. As I communicated to you, the Board unanimously believes that the $33.00 per share proposal is inadequate and does not reflect the Company’s inherent value. Accordingly, we would not accept an acquisition of Alpharma at the price you are proposing.

That said, our Board takes its fiduciary duties seriously and is deeply committed to enhancing value for our shareholders. It is in that spirit that we offered to provide you with a due diligence opportunity so that we could demonstrate to you the fair and appropriate value for Alpharma. However, you declined to enter into a customary confidentiality agreement that would enable us to have an orderly evaluation process and ensure that we are able to protect the long-term interests of our shareholders. As you are well aware, a confidentiality agreement will enable us to provide non-public information that we firmly believe will demonstrate that $33.00 per share significantly undervalues Alpharma. A confidentiality agreement is also very important for us to protect sensitive, non-public information when it is being disclosed to a direct competitor.

Our Board has deep confidence in Alpharma’s future and believes we are executing well on our strategic plan. We also believe there are a number of near-term events surrounding EMBEDATM that will drive increased value for our shareholders in addition to the potential value of the rest of our pipeline. We are currently in a phase of investment for the Company, which we are confident will create significant value for our shareholders and do not believe is reflected in your proposal.

We are willing to entertain a proposal from you that we believe more appropriately values the Company. To that end, we remain open to discussions with you at a price that we believe reflects the inherent value of Alpharma as well as the significant benefits, as your letter and comments to investors earlier today describe, that would accrue to King as a result of the transaction. If you have an interest in engaging in a dialogue on that basis, please contact me at your earliest convenience.

Sincerely,

Dean J. Mitchell
President and Chief Executive Officer

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Wasn’t it just a few weeks ago King Pharmaceuticals was trading 15% higher due to speculation Pfizer was buying them?

How many different ways are there to spell “market manipulation”?  Methinks not more than one.

King announced today that it has submitted a proposal to acquire all of the outstanding shares of common stock of Alpharma for $33.00/share (37% premium over previous day’s close) in cash. The proposed price implies a total equity value of approximately $1.4 billion for 100% of the fully diluted share capital and an enterprise value of approximately $1.2 billion.

The board of Alpharma had previously rejected a confidential offer and insead of sweetening the pot or finding something else, King chose to make public the offer and judge shareholder sentiment.  In an open letter filed with the SEC, King CEO Mr. Markinson wrote:

Mr. Dean J. Mitchell
President and Chief Executive Officer
Alpharma Inc.
440 Route 22 East
Bridgewater, NJ 08807

Dear Mr. Mitchell:

As conveyed to you in conversations beginning in July and again in our letter dated August 4, 2008, the Board of Directors and management of King Pharmaceuticals, Inc. (”King”) believe that a combination of King and Alpharma Inc. (”Alpharma”) presents an exciting opportunity to create significant value for our respective stockholders. The complementary aspects of our companies’ products, pipelines, customers and capabilities would create greater scale and improved efficiencies, allowing the combined entity to compete more effectively in the future. We are disappointed that you have declined our proposal.

As previously stated, King is willing to pursue the acquisition of all of the outstanding shares of Alpharma common stock for $33.00 per share in cash. This price represents a 37% premium over the closing price of Alpharma common stock on August 21, 2008, the last trading day prior to public disclosure of King’s proposal, a 49% premium over the closing price of Alpharma common stock on August 4, 2008, the date of King’s initial written offer to Alpharma, and a premium in excess of approximately 38% over Alpharma’s average closing price during the one, three and twelve-month periods ended August 21, 2008. We are convinced that our proposal provides a unique opportunity for Alpharma’s stockholders to realize full and immediate value. Our proposal is not conditioned on financing.

Our Board has authorized this proposal and we are ready to move forward expeditiously. As mentioned to you previously, we have conducted due diligence relating to Alpharma based on publicly available information and we have retained Credit Suisse and Wachovia Securities as our financial advisors andDewey & LeBoeuf LLPuf LLP as our legal advisor. Our proposal is conditioned upon, among other things, the negotiation and execution of mutually acceptable definitive transaction documents containing provisions customary for transactions of this type, including the receipt of any required regulatory and third party approvals and consents.

We remain ready to meet with you and your representatives at your earliest convenience to discuss our proposal in detail and conduct confirmatory due diligence, to negotiate definitive transaction documents and to obtain all necessary regulatory approvals.

We hope that you and your Board of Directors will reconsider this proposal and view it as we do - an excellent opportunity for the stockholders of Alpharma to realize full value for their shares to an extent not likely to be available to them in the marketplace. We are prepared to discuss all aspects of our proposal with you, including structure and economics. We have great respect for your organization and would expect to combine the strengths and competencies of Alpharma’s employees into our company.

We continue to prefer to work together with you and your Board to complete a negotiated transaction, and we are prepared to commit all necessary resources to do so. If we are unable to negotiate a transaction, we are prepared to take this offer directly to your stockholders.

We trust that you and your Board of Directors will give this proposal serious consideration. We would appreciate your prompt reply to our proposal.

We look forward to your prompt and favorable response.

Very truly yours,

Brian A. Markison
Chairman of the Board,
President and Chief Executive Officer

It will be fun to watch this one shake out.

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The press release indicates a willingness to listen to offers that “recognizes the value of the company and reflects the significant benefits that would accrue” to an acquiring company.

Move along folks, nothing to see here.

I’m calling $103/share.

Any guesses as to whether Roche will up the bid? By how Much?

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