Rejected Again: Ablynx Turns Down Novo Nordisk's Sweetened $3.1B Bid

Novo Nordisk A/S has twice made a bid to acquire Ablynx NV., and twice been rejected. The first bid was on Dec. 7, 2017, for about $31.57 per share in cash. Today, the company reported that Novo Nordisk had sweetened the offer to about $33.66 per share and a Contingent Value Right (CVR) linked to two upcoming milestones with possible total cash payments of about $3.01 per share. But the company’s board unanimously rejected the deal as fundamentally undervaluing the company. The most recent bid had a total value of about $3.1 billion.

The offers underline Novo Nordisk’s interest in expanding beyond diabetes and into the rare diseases market. One of Ablynx’s pipeline drugs is caplacizumab for an ultra rare blood clotting disorder, acquired thrombotic thrombocytopenic purpura (aTTP), which is expected to be approved this year.

"The size of this transaction is of a larger magnitude than what we’ve done in the past decade," Jesper Brandgaard, Novo Nordisk’s chief financial officer, told BloombergMarkets. "It marks a higher risk willingness and a willingness to obtain innovation from outside Novo Nordisk."

Novo Nordisk indicates its going public with its offer to pressure Albynx into negotiating a deal. And Novo also says it’s not just caplacizumab, but the company’s entire pipeline and European operations that it’s interested in.

But Novo Nordisk may not be the only company interested in Ablynx. John Carroll, with Endpoints News, writes, "Sanofi recently signed up as the latest in a lineup of partners working with Ablynx, attracted to a platform tech for small ‘nanobodies’ which are a sliver of the size of regular antibodies—making them better built for some diseases. Baird’s Brian Skorney couldn’t be happier. He expects a bidding war may break out."

Baird wrote in a note to investors, "We think this is only the starting point for Ablynx as a target and believe we could see other bidders come in. We think shares will trade above the offer price this morning, with the U.S. shares close to the $30s. We’re reiterating Ablynx as one of our top picks for 2018."

Despite increased competition and downward pressure on pricing in the diabetes market, Novo Nordisk shares rose 32 percent in the last year, giving it a value of about $136 billion. Novo Nordisk and Ablynx have been involved since 2015 in a research collaboration.

Ablynx, on its part, appears to be either totally uninterested in a sale, or playing hard to get. "After careful consideration, the Ablynx Board of Directors unanimously determined that Novo Nordisk’s proposal is not in the best interests of the Company and its shareholders as it fundamentally undervalues caplacizumab, the Ablynx pipeline, platform, technology, people, and know how," said Edwin Moses, Ablynx’s chief executive officer, in a statement. "The Board sees no merit in ceding control of its assets without full upfront value recognition for shareholders and believes the proposed consideration and a complex instrument like a CVR does not constitute a basis for further discussions at this time."

Moses went on to say, "With Ablynx’s enormous upside, we are focused on executing on opportunities that have the potential to deliver long-term growth and returns and are confident in our ability to create significant value."