Novo Nordisk
Hand lifting vials

Novo Goes Public With $3.1 Billion Bid to Pressure Ablynx

Jan. 8, 2018
The offer for Ablynx signals a higher appetite for deals at the world’s biggest maker of diabetes medicines.

Danish drugmaker Novo Nordisk A/S made its largest takeover offer ever, an unsolicited 2.6 billion-euro (US$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. A year after taking the reins, Chief Executive Officer 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 in a telephone interview. “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 in a statement Monday. The maximum payment is 44% more than the stock’s closing price on Friday in Brussels.

Novo shares rose less than 1% to 338.80 kroner at 11:17 a.m. in Copenhagen. Ablynx was suspended on the Brussels stock exchange pending a statement. The company, 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 presented the latest offer to Ablynx’s board on Dec. 22, following a previously undisclosed 26.75-euro-per-share bid earlier in December. He called his counterpart at Ablynx, Edwin Moses, to try to start talks on Jan. 5, and again the Belgian company’s board refused, according to Novo. Moses and another executive did not immediately return calls to their offices or mobile phones.

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 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.

Biggest Shareholder

Ablynx’s biggest shareholder, Aat van Herk, did not immediately return calls seeking comment. The Dutch millionaire saw his fortune boosted once before in a pharmaceutical takeover, when in 2011 he tendered his Crucell NV stake to Johnson & Johnson, which bought the company for about $2.4 billion.

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. A new entry called Ozempic, approved by the U.S. Food and Drug Administration last month, is expected to help.

Rare Disorders

Novo Nordisk shares have risen 32% in the past year, valuing the company at 846 million kroner (US$136 billion).

Ablynx develops drugs from proteins known as nanobodies. Caplacizumab addresses the rare disorder called acquired thrombotic thrombocytopenic purpura, in which blood clots form in small blood vessels throughout the body. The illness can block the flow of blood to the body’s organs, according to the U.S. National Heart, Lung and Blood Institute.

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, a key deal-making venue, kicks off Monday in San Francisco. Celgene Corp. announced late Sunday that it had agreed to buy closely held Impact Biomedicines for $1.1 billion upfront to gain an experimental blood cancer treatment.

Evercore is acting as financial adviser to Novo Nordisk, according to the statement.

By Daniela Wei and James Paton

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Licensed content from Bloomberg, copyright 2016.

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