Biogen Makes Hostile Bid for Facet Biotech

Corrected to indicate that trading in Facet's stock was halted based on news of Biogen's offer Friday. The story originally misreported that the stock was apparently unaffected by the news. This correction also updates the story to provide further detail from Biogen's letter to Facet's board of directors.

CAMBRIDGE, Mass. (TheStreet) -- Biogen Idec(BIIB Quote) said Friday that it made an unsolicited offer to acquire Facet Biotech(FACT Quote) for $14.50 a share in cash.

Trading was halted in Facet shares after Biogen made its bid public in a press release. The stock had been trading down 3 cents to $8.79, but after after reopening the price surged 75% to $15.43 on heavy volume. Biogen shares, meanwhile, gained 96 cents, or 2%, to $50.87.

In the press release, Biogen said its CEO, James Mullen, sent a letter to the company's board of directors arguing that the price of the offer "represents an extremely attractive opportunity for Facet's shareholders to realize today the future value of their company."

The offer, which values Facet at about $344 million, based on its 24.6 million shares outstanding, has become a hostile one.

Biogen said it first made its intentions known to Facet on Aug. 17. Four days later, Biogen proposed a price of $15 a share for Facet, on the condition that the smaller biotech outfit not talk to other parties or cut any other deals. On the day that Mullen was to meet with Facet CEO Faheem Hasnain, Facet announced a partnership with Trubion Pharmaceuticals -- a foolish move, at least according to Biogen.

In Friday's press release, Biogen said it believes the Trubion relationship "reduces the value of Facet, as apparently do Facet's investors, as evidenced by the 22% reduction in Facet's stock price since announcing the Trubion collaboration."

Then, on Aug. 25, Facet officially rejected the $15 offer, saying that it was "not in our stockholders' best interests to pursue such a transaction on the terms you have offered."

Biogen CEO Mullen's letter to Hasnain on Friday began, "We are deeply disappointed Facet chose to announce a collaboration with Trubion on the day you and I were scheduled to discuss Biogen Idec's all-cash proposal to acquire Facet," and ended: "If you are interested in negotiating a transaction, please call me as soon as possible." There was no box for Facet to check.

In a statement responding to Biogen's public outing of its bid on Friday, Facet said that its board "will respond promptly to Biogen Idec's more recent proposal of $14.50 per share, and the company urges stockholders to await a further response from Facet before making any decisions."

The two companies have, since 2005, been jointly developing a drug called daclizumab, for the treatment of multiple sclerosis, and another for solid tumors. Biogen has argued that subsuming Facet will help quicken the drugs' paths to commercialization.

But as Facet's CEO said in his rejection letter, "As you well know, net of cash, your offer places negligible value on, among other things: daclizumab, on which our companies have been partnered for four years, and which we recently decided jointly with you to advance into phase 3; our pipeline, which includes multiple products in clinical trials; our protein engineering technologies; and our scientific capabilities."

Biogen said it doesn't need financing to proceed with a deal, nor does it require approval from Biogen shareholders.

-- Written by Scott Eden in New York

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