Welcome back to Baby Breakerdom! The past week's quest to uncover budding Rule Breakers finds earlier predictions of buyouts coming true. And so I ask: Is this a good thing?
Let's start the examination process with Conforma Therapeutics, which has accepted a $250 million buyout from Biogen IDEC (Nasdaq: BIIB ) . The deal, which is expected to close during the second quarter, calls for Biogen to pay $150 million in cash at closing and as much as $100 million more if certain "development milestones" are met. Conforma also plans to form a start-up called Cabrellis Pharmaceuticals to take over Amrubicin, a lung-cancer therapy it acquired from a Japanese pharma.
VentureWire reports that, before the acquisition, Conforma had raised $58.6 million in financing from a number of venture firms. It's those VCs -- including Domain Associates, Forward Ventures, IngleWood Ventures, Lilly Venture, and S.R. One -- that are funding the spin-off of Cabrellis.
So, is this a good deal for Biogen? It sure seems like it. My read of the first-quarter results, showing a year-over-year decline in sales cancer drug Zevalin, suggests that Biogen can use all the oncology expertise it can get its hands on. And it's not as though the price is terribly high; Biogen had more than $2.2 billion in cash and investments on the books as of the latest quarter.
Next up is Fox Interactive, a unit of News Corp. (NYSE: NWS ) . This week, the media giant made good on its promise to bulk up its Internet offerings by acquiring Web start-ups kSolo and Newroo for undisclosed sums. I won't get into all of the details because Foolish friend Alyce Lomax already did a terrific job of that here.
Instead, I'll go right to the question of the hour: Is this good for News Corp.? I'm not so sure. Both companies were acquired in their seed stage, before any venture investments. That would be a great thing only if News Corp. were looking to build and then flip these firms as a VC would. But it isn't. CEO Rupert Murdoch is trying to create a stable of well-traveled Web properties to extend his already massive media empire. That's not likely to be an easy task. And if you ask me, News Corp. is hardly an expert in corporate development, which can be the business equivalent of nation-building. (Pick up a newspaper to get some perspective on how difficult that can be.)
Good luck, Mr. Murdoch. You're going to need it.
That's all for now. See you back here next time, when we continue the quest to find the next ultimate growth stock.
For more Rule Breaking Foolishness:
- Check in with last week's infants.
- Isn't it time you swung for the fences?
- You don't want the Leinart portfolio. Trust me.
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Biogen IDEC is aMotley Fool Stock Advisorselection.
Fool contributorTim Beyersthinks it's kinda funny to watch Rupert Murdoch trying to buy himself hip. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what is in his portfolio by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.