Roche forced to extend Spark tender offer as investors sue over $4.3B merger

Roche’s $114.50-per-share offer for Spark Therapeutics represents a whopping 122% premium to the gene specialist’s closing price on the last trading day before the acquisition announcement. But some Spark investors still think the price is too low.

So far, Spark investors have tendered only 29.4% of the shares outstanding, which doesn't exactly inspire confidence in the deal; Roche needs more than 50% to carry out the combo. The Swiss drugmaker said it's extending its tender offer to May 2 from the previous deadline of Wednesday.

The lackluster results aren't Spark's only problem with its investors. The company faces shareholder lawsuits that call the deal price too low—a "bargain," one suit claims—and question Spark's accounting methods and deal disclosures.

Despite the delay, Roche still expects to close the transaction by the end of June as planned, a company spokesperson told FiercePharma. All terms of the offer remain the same, the company said in a Wednesday statement.

Roche also withdrew its report to the Federal Trade Commission about the pending acquisition and said it plans to refile around April 10. The form carries a 15-day waiting period for the agency to determine whether the transaction meets antitrust requirements.

"The withdrawal and refiling were done in agreement with Spark and the relevant FTC stakeholders in order to provide more time for the FTC to complete their review," the Roche spokesperson said.

The 29.4% support Roche has rallied—a number in stark contrast to the 122% premium price it's paying compared to Spark’s closing price on Feb. 22—reflects some resistance the pair is facing before Spark investors.

When comparing the deal price to Spark’s 52-week high on July 9, 2018, the deal premium drops to 19%, according to Roche. The biotech’s stock was hit hard in August when it unveiled disappointing data for its lead candidate, SPK-8011, a hemophilia A gene therapy that seems to underperform BioMarin’s rival candidate valoctocogene roxaparvovec. Spark’s stock jumped at the Roche takeover news and was trading at $114 at the close of Tuesday.

Roche first offered $70, according to Spark’s proxy filing with the Securities and Exchange Commission, only to jack up the price to $114 in a bidding war against an unidentified company. The value Spark’s board originally said it would consider? In the $80s per share range, according to the SEC filing.

In its statement, the Roche spokesperson reiterated that the offer price is "full and fair," and that the deal was approved unanimously by both company’s boards. But some Spark shareholders apparently don’t think so.

Three separate lawsuits have been filed by Spark shareholders against the company with the Delaware District Court. The investors argue Spark was undervalued, citing the approval of Luxturna as evidence that the company is well-positioned for financial growth.

"Roche essentially is purchasing the future in gene therapy for a bargain," plaintiffs in one suit said in their complaint.

The lawsuits also allege that the solicitation statement Spark filed with the SEC "misrepresents and/or omits material information that is necessary for the company’s stockholders to make an informed decision concerning whether to tender their shares."

Specifically, the disgruntled shareholders argue that Spark uses non-GAAP accounting measures but fails to provide more information on the differences between this approach and GAAP. They also criticize the cash flow analysis Centerview—Spark’s financial adviser—put forward.

Roche declined to comment on the lawsuits.

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