Not spoiled it’s just that it did not reach full potential. Think of it this way. You buy a house for $300K it appreciates and appraises for $485K then someone offers you $425K, sure you made a profit by selling it for $125K more than what you bought it for, but if you held out and negotiated more effectively there is a possibility of getting the $485K your house is really worth.
You are confusing two concepts…
Price is what someone is willing to pay…value is what it’s actually worth. In my mind TC and the BOD didn’t work to get true value and they took what someone was willing to pay at that moment, hence they did not maximize the price to reach value and that is what a second time(once failed) CEO of a small/mid cap company gets. TC is not Jack Welch nor will he be writing any books on negotiations and leadership. There is not one analyst that thinks Amgen didn’t get the better end of this deal, and I for one agree.
Lastly even TC stated that the biggest struggle of this whole process was singing the documents agreeing to $125…that he admitted that he was very conflicted on the price speaks volumes…I think he go worn out, and bested by a more savvy businessman…and if we look at the natural high (pre Amgen press release) of ONXX this year was $101…so in essence he really only added 23% value to company…which really isn’t anything to boast about. Stock probably would have it $140 by itself in 2014.
So again how is he some hero for getting $125? Not greedy or spoiled just underwhelmed by the poor negotiations by the BOD and TC.
The difference from the market cap and the purchase price is the unvested options that will be accelerated upon change of control. This cost is part of the acquisition price not reflected in outstanding shares times the offer price of $125. Generally speaking a buyout price rarely matches up to the market cap, divided by outstanding shares.
The Amgen stock is up because investors believe that with one less bidder driving up the price the less out of hand the bidding will get hence less cash exchanged on the deal if they win out. It’s either Amgen or Gilead and the last thing Amgen wants to do get lapped by Gilead especially as they enter therapeutic oncology…A deal is immanent now a matter of if, but when, by whom, and for how much. My guess is Gilead for $147 announced over the weekend.
There stock went up when they made their first offer...this tells me that Amgen will win out and their investors are happy about that...
Dummy the deal is already done…what the share price does now is irrelevant…all you are seeing are cowards jumping out because of Pfizer bowing out…that’s it…the share price was more volatile in the $80’s with no deal in the works…
Yeah I don’t see it that way at all…Pfizer knew that the starting point was going to be higher than $120 or why else would they’ve even bothered jumping in at all? I would assume that they didn’t think when TC said the $120 was ‘significantly undervalued’ they were going to convince him otherwise and get it for $130. I don’t think an 8% increase on $120 would be considered ‘accurately valued’ in TC and the board’s mind and Pfizer would have known that…the price got bid up and they balked…having been hands on for four different M&A’s it can absolutely be that simple…Let’s say Pfizer had a $140 max for a buyout and Gilead comes in at $145. Pfizer gets notice that they were outbid(but not by whom) and has a chance to counter or bow out. They bowed out...that's it. No doubt a deal gets done and the deal is for over $140. My 2 cents but this is not all that complicated or messy of a process compared to other biotech M&A's.
The best thing that has happened in terms of buyout signaling is that Pfizer backed out (if in fact that is true at all)!
If Pfizer backed out it tells us a three things…
1. They were in it
2. There are serious bids/offers on the table
3. The bid/bids are too rich for Pfizer’s blood
If there weren’t serious offers on the table or they were low why would Pfizer back out? At the very least we know that they were in it… What it tells me is that there is a very serious offer at a far higher price than many of you or Pfizer anticipated and they walked. It wasn’t like Pfizer said, Oh Amgen offered you $120 well Pfizer will offer you $130! They had to know the bidding was going to start north of the trading price of $135ish. \
So to that end what is too high of a number, in your mind, that made Pfizer squeamish?