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When shareholders attack, itís not just the news that suffers
It's the phone call or e-mail that every publication editor dreads. It comes seconds before deadline time, as the content your editorial team has worked for the last month to produce is committed to print. It comes from a writer whose story has morphed so materially from its original state that it can't run as plannedó usually leaving a black hole in your layout to be filled at the eleventh hour.
It doesn't happen often, but in the last few months here at ddn, it has become a monthly freak-out moment for us all. This time, the voice on the other end of the line belonged to our veteran reporter and science guru, Lloyd Dunlap, who delivered the unfortunate news that his story about Axela's acquisition of Xceed Molecular was a no-go. In this case, the financing for the dealówhich was to take place in Canada, an area especially hard-hit from the economic recessionófell through. I encouraged Lloyd to report on this new development to the best of his ability, because although it tells a story that is quite different from what the companies probably expected, it's still an important one to share with our readers.
Financing problems have plagued several similar deals lately, but the real scene-stealer over the last few months has been shareholders who feel like they are getting the shaft. This summer, many companies said "thanks, but no thanks" to acquisition offers, feeling they are not being valued at their true worthóand keeping our newsroom glued to our computers for updates as fun in the sun passed us by.
In July, mere weeks after Charles River Laboratories International Inc.'s $1.6 billion bid for Chinese drug developer WuXi PharmaTech Inc. graced our cover, shareholders objected and the merger was canceled. Topping WuXi shareholders' list of objections were that the acquisition price was "excessive and relies on highly aggressive assumptions to value WuXi" and that the claimed revenue synergies were "highly speculative" and the strategic benefits "questionable."
The cover story from our July issue, which reported on Celgene's $3 billion-plus offer for Abraxis BioScience, also hit a snafu shortly before press time. Although the deal has cleared regulatory hurdles, Abraxis shareholders have filed a lawsuit alleging that the company's board of directors breached their fiduciary duty for failing to adequately shop for fair offers and selling Abraxis too cheaply. The final chapter on this melee is yet to be written.
However, at least one shareholder saga recently had a happy ending. The tempestuous pas de deux that has been Novartis' courtship of eye-care company Alcon Inc.ówhich we have been covering since April 2008óhas birthed a $28.3 billion all-cash deal that gives Novartis a controlling stake in Alcon. Some Alcon shareholders opposed the move, claiming that Novartis offered less per share than it paid to Alcon's parent company, Nestle, for its stake.
Finally, this month, we are once again rolling the dice on our cover story, which details sanofi-aventis' long-awaited bid for Cambridge, Mass.-based biotech Genzyme Corp. As we went to press, the non-binding offer came in at $18.5 billion, or $69 a share, after several unsuccessful attempts to reach an agreement with Genzyme. Genzyme promptly refused the offer. For months, rumors have swirled that sanofi would pursue a possible hostile takeover of Genzyme, or back off its offer and simply find a different U.S. firm to bring into its France-base fold. As a decision on this deal is pending, you can expect to see ddn give this story some more ink. Stay tuned for the next installment in what I am calling the Shareholder Soap Opera of 2010.