There are two rules in negotiations. Don't be the first to name a number and don't get in a bidding war with yourself. Biogen Idec (Nasdaq: BIIB ) has broken both of them.
Back in September, Biogen made an unsolicited public offer to buy partner Facet Biotech (Nasdaq: FACT ) for $14.50 per share. Biogen knocked down its original $15-per-share offer to the board after Facet licensed a phase 1 drug from Trubion Pharmaceuticals (Nasdaq: TRBN ) . At the time, Biogen characterized the $14.50 as an "extremely attractive opportunity" for Facet's shareholders.
Apparently not attractive enough. Investors sent Facet's shares above that level and haven't looked back. Facet's board urged investors to reject the tender offer, and, with shares trading well above the tender offer level, why wouldn't they? If they wanted to sell their shares, they'd do it on the open market, not to Biogen for a lower price.
Yesterday, Biogen sweetened the offer to $17.50 per share, a 21% increase. That's nearly double what Facet was trading at before it made its public offer. In a letter to Facet's shareholders, Biogen says that this is its "best-and-final offer." Biogen has licensed 50% of Facet's multiple sclerosis drug daclizumab and doesn't "intend to overpay for the rest."
That values Facet at about $440 million, which is a decent price for a company with a couple of phase 2 drugs, but Biogen is still getting a pretty good deal considering that the company comes with $325 million in cash and equivalents -- and no debt -- seeded after its spinoff from PDL Biopharma (Nasdaq: PDLI ) .
Anyone else want to play? Bristol-Myers Squibb (NYSE: BMY ) ? You've been doing some strategic acquiring, recently. No? How about Johnson & Johnson (NYSE: JNJ ) ? You already own part of Elan (NYSE: ELN ) , Biogen's partner for another MS drug.
Ah, well. Hopefully Biogen doesn't continue down this damaging road of bidding against itself. After all, there are plenty of other biotech bargains out there.