No Holiday Goodwill Twixt Biogen and Facet

There's nothing like a good hostile takeover to get you in the holiday spirit.

Biogen Idec's (Nasdaq: BIIB  ) attempts to buy Facet Biotech (Nasdaq: FACT  ) date back to August. First it was a private offer to the board and then a public offer to Facet's shareholders. Earlier this month Biogen upped its bid by 21%, attempting to get Facet's board to sign off on the deal. It rejected that one too.

Now things are really heating up. Yesterday Biogen told Facet's shareholders it's ready for a proxy fight. The company wants shareholders to tender their shares before the offer expires tonight and they'll vote to elect a board that will sign off on the deal.

Facet countered today by allowing one of its largest shareholders, The Baupost Group, to increase its holdings from 14% to 20% and said that it had commitments from its two largest investors, who collectively hold 28.7% of the shares, not to tender their shares to Biogen. Shares fell substantially on the news, presumably because investors were hoping for a takeout at $17.50 per share, but have since recovered much of that drop. Wonder if Baupost decided that the drop was a good time to use its new-found power?

Assuming Biogen can't get shareholders to tender more than half of the shares, the ball will be back in Biogen's court. The company said $17.50 per share was its final offer, but it also said $15 per share was a fair offer back in September and eventually raised the bid. At $17.50, Biogen is getting a good deal because it'll come with almost $13 in cash and no debt, thanks to the spinoff from PDL Biopharma (Nasdaq: PDLI  ) . But if no one is willing to offer more -- including shareholders at this point -- why would it up its bid?

From the sidelines, hostile takeovers are much more fun to watch than civil acquisitions like Pfizer's (NYSE: PFE  ) , Merck's (NYSE: MRK  ) , and Teva Pharmaceuticals' (Nasdaq: TEVA  ) recent acquisitions of large rivals where boards just announce that they've agreed to a price without any hoopla.

But for investors who own shares in Facet, it has to be nerve-wracking. A Christmas present from Biogen in the form of a higher bid may be coming, but the box might also contain a lump of coal. If you're a long-term believer in the company's pipeline, then either outcome should be acceptable. If you're not thinking long term, then you probably shouldn't be holding the shares anyway. I hear Vegas is warm this time of year.