Biogen ripe for $76-a-share buyout; Genentech buyout bid opens; Rohm & Haas pressures Dow Chemical

By Cristal Cody

Tupelo, Miss., Feb. 9 - Biogen Idec Inc. is ripe for a takeover with a predicted buyout price of $76.00 a share, an analyst said Monday.

The company is fending off a proposal from investor Carl Icahn to elect new directors and move the incorporation to North Dakota to make use of a new shareholder rights law.

Also on Monday, Roche Holding AG started its $86.50-a-share cash tender offer for Genentech Inc., but market observers expect shareholders will hold out for a higher offer.

In other major deals, Rohm & Haas Co. kept up the pressure on Dow Chemical Co. to close the $78.00-a-share buyout.

On Wall Street, investors sent the Dow Jones Industrial Average down 9.72 points, or 0.12%, to 8,270.87.

The S&P 500 index rose 1.29 points, or 0.15%, to 869.89, while the Nasdaq Composite index lost 0.15 of a point, or 0.01%, to close at 1,591.56.

North Dakota and Biogen

North Dakota's new law to make it easier for corporate buyouts is attracting attention from a variety of companies and investors.

Icahn Partners LP's nomination to move Biogen's Delaware incorporation to North Dakota would take advantage of the new state law, which removes most takeover obstacles, the law's creator told Prospect News on Monday.

"There have been probably 15 shareholder proposals submitted to various companies that are going to be coming up for a vote this year," said William H. Clark Jr., who drafted the 2007 law. "North Dakota has a complete set of shareholder rights that aren't around anywhere else."

The North Dakota Publicly Traded Corporations Act includes restrictions on poison pills and other anti-takeover measures.

"It certainly removes some of the obstacles that companies have come up with but it doesn't prohibit them completely," Clark said of the law and company takeovers. "The act doesn't outlaw poison pills, but it places limitations on how that can be used. It doesn't prohibit anti-takeover measures, but it requires a special vote in order to approve them."

Clark drafted the law "because a number of activist investors hired me to do it. They were frustrated with the current system of state laws," said Clark, who is a partner in the national law firm of Drinker Biddler & Reath LLP and a director of the North Dakota Corporate Governance Council in Bismarck. "We needed to create a new paradigm of governance that would reinvigorate corporate democracy."

Icahn did not return calls for comment.

Jason Zhang, an analyst with BMO Capital Markets, said in a research note on Monday that Biogen is a likely takeover target with an estimated buyout price of $22.4 billion, or $76.00 a share.

"With its $4+ billion revenue and yet market capitalization of only $15 billion, Biogen sits at the sweet spot for most large companies' target list," he said. "We assign a two-thirds probability that Biogen will be acquired within the following 12 months."

Biogen shares fell 32 cents, or 0.61%, to close Monday at $52.16.

Genentech tender offer opens

Roche opened its cash tender offer for shares of Genentech at $86.50 a share on Monday.

Roche currently owns 55.8% of Genentech's outstanding stock.

The offer expires March 12.

Analysts don't expect shareholders to bite.

Zhang said observers "don't think Roche will be successful at acquiring DNA [Genentech] at this low offer and a higher multiple is likely for the deal."

Genentech's stock fell 30 cents, or 0.36%, to close at $82.70.

Rohm & Haas keeps up pressure

Rohm & Haas said in a statement that it believes Dow Chemical has the "resources and flexibility to live up to its obligations under the merger agreement. Rather than focus on the necessary steps, Dow has embarked on an aggressive campaign in an attempt to frighten our employees, communities and customers with its statements."

Rohm & Haas filed a lawsuit to force Dow to complete the merger after Dow backed out on completing the deal last month. A trial is scheduled for March 9.

Rohm & Haas said in a letter sent to Dow's board on Friday that Dow's intervention with the Federal Trade Commission "went far beyond what Dow had previously disclosed."

Rohm & Haas alleges that Dow chief executive Andrew Liveris lobbied commissioners to delay clearing the deal. Dow denies any wrongdoing.

Federal Trade Commission spokesman Claudia Bourne Farrell told Prospect News on Monday that "we don't have any comment" on the allegation.

Shares of Rohm & Haas lost 22 cents, or 0.39%, to end the day at $56.28.

Dow shares fell 23 cents, or 2.11%, to close at $10.65 on Monday.

Mentioned in this article:

Biogen Idec Inc. Nasdaq: BIIB

Dow Chemical Co. NYSE: DOW

Genentech Inc. NYSE: DNA

Roche Holding AG Swiss: RO

Rohm & Haas Co. NYSE: ROH

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