Novo Nordisk goes public with $3.1bn bid to pressure Ablynx

Bloomberg

Danish drugmaker Novo Nordisk A/S made its largest takeover offer ever, an unsolicited 2.6 billion-euro ($3.1 billion) bid for Belgium’s Ablynx NV, to beef up its lesser known blood-disorder unit and rekindle growth.
The offer for Ablynx signals a higher appetite for deals at the world’s biggest maker of diabetes medicines. After taking the reins, CEO Lars Fruergaard Jorgensen is looking to expand beyond the field of diabetes and gain medicines that command high prices because they target rare diseases. One Ablynx treatment called caplacizumab is poised for approval this year for an unusual disorder in which blood clots form in small vessels throughout the body.
“The size of this transaction is of a larger magnitude than what we’ve done in the past decade,” Chief Financial Officer Jesper Brandgaard said. “It marks a higher risk willingness and a willingness to obtain innovation from outside Novo Nordisk.”
Novo went public after Ablynx rejected a proposal that includes an upfront cash offer of 28 euros a share and potential cash payments over time of up to
2.50 euros per share tied to the success of two experimental medicines, the Bagsvaerd, Denmark-based drugmaker said.
Ablynx, whose stock has almost doubled since the beginning of 2017, could be worth as much as 36 euros per share if all the outcomes included in the contingent value right that Novo offered are successful, according to Peter Welford, an analyst at Jefferies Group LLC in London.
Jorgensen called his counterpart at Ablynx, Edwin Moses, to try to start talks on January 5, and again the Belgian company’s board refused, according to Novo. Moses and another executive did not immediately return calls. Novo may not be the only drugmaker interested in buying Ablynx. Bayer AG, Novartis AG, Shire Plc and Sanofi all have assets that would make the Ghent, Belgium-based company a good fit, according to analysts at Credit Suisse. GlaxoSmithKline Plc also stated its desire to build new pipeline technologies for the future. “We envisage Novo needing to hike the offer and could see counter-bids,” Welford of Jefferies wrote in a note to clients.
The takeover proposal comes as Novo Nordisk, the world’s biggest maker of insulin, faces increased competition. Though the market for diabetes drugs is huge—around $40 billion in sales—that’s drawn a flood of similar treatments from the world’s largest drugmakers, forcing them to compete on price for many older products.
Ablynx develops drugs from proteins known as nanobodies. The company is also developing a treatment for auto-immune disorders such as rheumatoid arthritis and systemic lupus erythematosus, as well as a viral infection in infants.
Novo’s announcement is part of a flurry of pharmaceutical industry deal news that investors can expect this week because JPMorgan Chase & Co.’s health-care investment conference was expected to kick off on Monday in San Francisco.