A document filed after trading Tuesday by Medivation Inc. (MDVN) discloses that the battle for the cancer drug developer was as competitive as it was made out to be during the several weeks before the company finally revealed an agreement to be acquired by pharmaceutical giant Pfizer Inc.(PFE) - Get Report .
In a higher-than-expected all-cash deal, New York-based Pfizer on Aug. 30 went public with a $81.50-per-share deal for the highly sought after target. The agreement equated to an enterprise value of $14 billion for San Francisco-based Medivation—leaps and bounds beyond the latest public offer from France's Sanofi SA (SNY) in July, at just $10 billion.
According to a proxy filing filed by Medivation with the Securities and Exchange Commission, the premium price paid for the company was largely the result of the hot demand commanded by its one marketed therapy, Xtandi, a prostate cancer drug widely viewed as having scarcity value.
Pfizer's initial non-binding preliminary bid for Medivation on Aug. 8 was valued at just $65 per share, according to a proxy filing. In addition to Pfizer, four other suitors submitted bids, two of which—identified only as Company 3 and Company 4—included contingent value rights, or CVRs, as part of their offer, the filing shows. (The filing also names Company 1 and Company 2 as bidders.)
CVRs are extra cash that suitors offer targets as a 'deal sweetener' in an acquisition should certain undeveloped assets ultimately achieve specified milestones. The latest rejected offer from Paris-based Sanofi was valued at $58 per share, plus a CVR of up to $3 a share.
In the second round of bids, Company 4 dropped out of the running, with the final round of bids further narrowing down to Pfizer, Company 1 and Company 2, with proposals to purchase the oncology company for $81.50 a share, $80.25 a share and $80 a share, respectively.
What ultimately prompted months of speculation surrounding the future of Medivation was a March 22 request by Sanofi's CEO, Olivier Brandicourt, to hold a phone discussion with Medivation's CEO, David Hung, the filing shows.
As Medivation subsequently continued to brush off interest from the French suitor, Pfizer from the early stages was next to enter the mix as a serious contender, the filing shows. Douglas Giordano, Pfizer's senior vice president, worldwide business development, contacted Hung on April 20, indicating an interest in participating in any strategic discussions Medivation might initiate, the proxy filing shows.
Medivation's financial advisers from JPMorgan Securities LLC and Evercore Partners Inc. from late June through early July contacted 11 industry participants including Pfizer, while Medivation contacted a 12th party, the filing discloses.
While the identities of the alternative bidders weren't identified in the filing, a number of Big Pharma rivals besides Sanofi were rumored to be in the running during the several weeks before to the announcement of a Pfizer-Medivation deal. The group of rumored suitors included Celgene Corp.(CELG) - Get Report , Gilead Sciences Inc.(GILD) - Get Report , Merck & Co.(MRK) - Get Report and AstraZeneca(AZN) - Get Report .
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The long-lasting process has seemingly bode well for both financial firms advising the target.
Medivation has agreed to pay J.P. Morgan a fee of approximately $51.3 million, $2.5 million of which was payable following its opinion and the remainder of which is to be paid upon completion of the transaction, according to the proxy.
Evercore is set to receive about $43.7 million, assuming the deal's completion, $2.5 million of which is owed with connection to the firm's opinion to the Medivation board.
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