Yes- after I read up on potential of their 2 'Phase III' drugs'- $52.50 was a 'insult'. Lets see if Pfizer comes up with bid- and go from there! Sanofi should just wait and come in as a 'spoiler' if it still makes sense.
Convincing shareholders to take a $52.50 buyout when the stock is currently at $60 will be quite a feat. Lowball offers tend to alienate sellers.
MDVN did as expected this morning: New amended 'consent ' statement that SLOWS down the process!
After doing more reading- found that MDVN has an effective poison pill in place:
According to WSJ - Most poison pills effectively caps ownership at a particular level—frequently around 10%. (Medivation’s threshold is currently 20%, but it wouldn’t be surprising if the board tweaked its pill in response to Sanofi.) That makes a takeover bid impossible to complete without the approval of the target board. And it also caps the ownership of hedge funds – who often lobby for deals — and keeps large shareholders from working together.
The chessboard looks a lot different for Medivation. Its corporate charter does permit shareholders to act by consent. That means that if the holders of a majority of the shares agree, the board could be changed to include directors more sympathetic to a Sanofi takeover.
Sanofi’s press release on Thursday announcing its bid contained — in the legal boilerplate at the bottom — a reference to this consent solicitation process. Such an action can be accomplished in a matter of weeks by clearing soliciting material with the Securities and Exchange Commission. Medivation could add some time to the process by changing its by-laws to add additional procedural hurdles, but Medivation shareholders can get their say relatively quickly as a result of the ability of Sanofi to run a consent solicitation.
Of course Sanofi still needs to convince shareholders to act, and given there are potential competing bidders, shareholders likely will give Medivation some time to look for a better deal. But it also isn’t necessary for Sanofi to start the solicitation process for the possibility to have a significant impact on the thought process of Medivation’s board.
So expect Medivation’s board to feel pressure to get a move on to find those alternatives — unless they feel they can convince shareholders to turn down Sanofi’s offer.
Hey You cannot buy a small biotech on actual value....you have to look at growth for the next 5 to 7 years..and project the valuation
Yes- they see Astra and Sanofi as top bidders- but the gist is whoever gets it will be criticized for paying too much. I'm guessing a 'tender offer' of $55 will start things off- since MDVN's management has no intentions of entering negotiations.
A good point but this particular analysis is from Sanofi's perspective and the Euro currency. When looking at the British Pound and tax rates, AstraZeneca, Glaxo and even Shire could have the advantage. Considering strategic fit or possibly desperation, Novartis may be ahead seeing it is selling its coveted position in Roche at market value, a stake that nobody in one's lifetime other than a family member will see again. European leadership usually does not think short term like immediate gratification, US institutional investors. So how can Medivation go for less than 75 without the BOD or JPM bungling the opportunity across the pond and waiting for the tax code and currency rates to change further. Tell everyone to make their final offers and be done with it. Make your own decisons and GL.
Looks like CSB did analysis to the 'value' MDVN presents to different companies. The drop in SNY's price is for most part that they are going to 'overpay' for MDVN:
"Sanofi posted first-quarter results largely matching our
expectations, and we don’t expect any changes to our fair
value estimate. Sanofi shares look undervalued,
particularly as the market looks concerned Sanofi will
overpay to acquire Medivation".
"Takeout Analysis: MDVN’s product and pipeline portfolio (prostate, breast,
and blood cancer) synergize with those of Sanofi (Taxotere, Jevtana),
AstraZeneca (Casodex, Lynparza, Arimidex/Nolvadex), and Roche (Xeloda,
Herceptin, Perjeta, Avastin, Rituxan) (see Figure 1). We have composed a
DCF model adjusting for each potential acquirer’s synergies regarding MDVN
revenues, COGS, R&D, and SG&A and tax rate (see Figure 2). However,
given MDVN’s manufacturing and intellectual property is already domiciled in
the US, it is unclear whether tax advantages could be leveraged in a deal.
Sanofi Prostate/Breast Franchises Synergize: We model MDVN worth
$55 to SASY ($65 w SASY’s 23% tax rate). We see Sanofi’s Taxotere sales
force potentially increasing MDVN sales 2% and assume a 20% reduction in
MDVN’s R&D, and 40% reduction in MDVN’s SG&A. We note a 12% tax rate
benefit over MDVN (23% vs 35%)".
I have feeling won't drop much more- since Wall Street over reacts to news. There are 'some other moving parts' -MDVN has two other 'potential blockbusters' in Phase III- so naturally they want $$$ for the 'possibility' of their success. You can look at Pfizer \ Allergan deal and see that Pfizer 'shot up 4 points' when deal was terminated. They even had to pay a $400 million termination fee to Allergan.
SNY beat by +.06 but missed on rev's....their best Diabetic drug didn't do as well as predicted....so hence the fall, coupled with the bid for MDVN will have to be higher, since their board rejected their offer,..too low of an offer......SNY reinterated full year guidance, so it's a BUY...be back to 44 in a week or so..
So based on what you are saying, with additional bidders coming online, and based on pure speculation, that SNY will win the bidding war and get it at a higher price. So we can anticipate that SNY will continue to drop in the near term, and drastically drop if and when they do win the bidding war.
Again, I can see the logic if they actually payout for the takeover, but to lose market value on anticipation, doesn't follow logic. Secondly, why potentially pay a 40% premium for a company that only has a market cap of roughly $10 billion with a stock price that is 10 times book value?
'The street' always looks ahead! The fact is now they are not getting it for $52.50 - so the street is anticipating a much higher take-out price and potential competitors coming in. I look for bidding up to around $65-70 area meaning probably around a 14 billion price tag for MDVN. ( You will see next week as SNY turns 'more hostile').
I wrote June 42 Puts- so if I don't get in then I will probably buy it or write more puts. Really liking SNY for its pipeline and potential to expand oncology with MDVN purchase!
I would agree with that had the transaction gone through, but Medivation turned the offer down. There shouldn't have been any significant loss to SNY due to a rejection. Even if it were the case, it doesn't justify an over $3.00 drop in four days. The drop today, is probably because they missed sales and earnings estimates; coupled with the overall market being down. Just my opinion!
I should have added that today might have been the best day to buy as stock is likely to go up a bit next week in anticipation of the dividend. I believe the market overreacted today to earnings and Medivation buyout talk. We shall see! I've been wrong before.
Checked it out. Proposed dividend is 2.93 Euros which exchanges to $1.63 and after foreign tax of 30%, dividend is actually $1.10. If you think the stock may recover a bit from today, sell calls for June and collect the annual dividend, one could potentially realize a nice return on a two month investment.