Novo Nordisk must be hoping that going public about its proposed €2.6bn ($3.1bn) bid for the Belgian biotech Ablynx will force that company’s seemingly recalcitrant management team back to the negotiating table.
This is a bold strategy for the Danish group, and speaks to both its desire to build its business outside diabetes and its obvious frustration over Ablynx’s refusal to engage in talks. By lifting the lid on the negotiations Novo is leaving it to shareholders to apply any pressure on management to consider the offer.
Thanks, but no thanks
This afternoon it looked as if Ablynx’s management was not budging, with its chief executive, Edwin Moses, claiming that the proposal fundamentally undervalued Ablynx and its strong prospects for continued growth, and was "not in the best interests of the company and its shareholders".
However, later in the day the company announced that its chairman Peter Fellner would be leaving with immediate effect, indicating a possible boardroom split over the approach to Novo's offer.
At €28 a share with CVRs of up to €2.50 the approach represents a 44% premium to Ablynx’s close on Friday and could be hard for shareholders to ignore. It is also the second approach from Novo, following the rejection of €26.75 a share earlier in December – hence the Danish group’s decision to pursue what is essentially a threat to go hostile.
Publicly, Lars Fruergaard Jørgensen, Novo Nordisk's chief executive, is selling the approach as a "compelling opportunity for both companies and in the best interest of Ablynx shareholders".
Following the lifting of suspended trading Ablynx shares were €30.80, close to the offer price, signalling that it might not take much more on the table for Novo to win the day.
While Novo is chiefly known for its diabetes franchise, the addition of Ablynx could up the company’s haemophilia-led blood disorders business, with the focus of the acquisition being firmly on caplacizumab, Ablynx's project for acquired thrombotic thrombocytopenic purpura (aTTT).
The asset has already been filed in Europe, and a US filing is expected in the first half, meaning that it might be launched in both regions this year if it secures priority US review.
Buying Ablynx would also give Novo a nanobody platform that could be used to expand its reach into the more price-secure rare disease market.
There is no arguing that Ablynx, which has yet to launch any products of its own, could benefit from the regulatory and commercialisation expertise of Novo Nordisk. For its part Novo will want to make a success of an acquisition that will help reduce its dependence on diabetes, as this sector struggles with increased pricing pressure from insurers and intense competition from rivals.
So the Danish group is unlikely to give up. Novo, which has a cash balance of just over $3bn, could up its offer a little more if it forgoes share buybacks in 2018. However, others might also try to take aim at Ablynx; Novartis, Shire, Sanofi and Bayer have all been listed as potential suitors.
But Novo or any other company will find a tough negotiator in Mr Moses, who made it clear today that his plan is for Ablynx to launch caplacizumab alone.
This is a high-risk strategy, and Mr Moses will need to be very persuasive in his arugument that remaining independent is the best strategy for Ablynx. And if Novo does walk away Mr Moses will have to show very quickly that he can deliver share price gains even close to the premiums currently being offered by Novo.