Biogen sticks to same bid; more deals likely for Varco; oil deals expected to focus on equity

By Cristal Cody

Tupelo, Miss., Dec. 11 - Biogen Idec Inc. on Friday responded to Facet Biotech Corp.'s rejection of its $493 million buyout offer with the news that it will go no higher, but other companies are taking a different view of the biotechnology company's value, an analyst told Prospect News.

Looking ahead, National Oilwell Varco, Inc. is expected to keep up its level of deal activity in the new year, an analyst told Prospect News.

In other situations, New Orleans-based oil and gas drilling and well services provider Superior Energy Services, Inc. said Friday it will buy British well installer Hallin Marine Subsea International plc for $168.3 million in cash.

Meanwhile, Wall Street closed mixed on Friday.

The Dow Jones Industrial Average added 65.67 points, or 0.63%, to close at 10,471.50.

The Standard & Poor's 500 index rose 4.06 points, or 0.37%, to 1,106.41, while the Nasdaq Composite index fell 0.55 of a point, or 0.03%, to 2,190.31.

Biogen unmoved to raise bid

Biogen said the $17.50-a-share cash tender offer for Facet's stock represents its "best-and-final offer."

On Thursday, Facet's board said the offer does not reflect the company's value or its prospects.

The company said it has opened up its books to Biogen and other interested parties and will seek other proposals.

Biogen's tender offer expires at midnight ET on Wednesday. A majority of shares must be tendered and Facet's board must redeem the share purchase rights and approve the offer in order for the deal to go through.

"Unless Facet stockholders tender a majority of the outstanding shares by the expiration date, Biogen Idec will allow its tender offer to expire," the company said in a statement on Friday.

Cambridge, Mass.-based Biogen creates products for diseases that include lymphoma, multiple sclerosis and rheumatoid arthritis.

Biogen has partnered with Facet since 2005 to develop cancer and multiple sclerosis drug treatments. The Redwood City, Calif.-based company was spun off in December 2008 from Incline Village, Nev.-based PDL BioPharma, Inc.

Carol Werther, an analyst with Summer Street Research Partners, told Prospect News in an interview that the company has a potentially successful drug in the works to treat myeloma tumors that has just come to the industry's attention in the past month.

"Clearly, before the offer they were trading at a very low price, and then other companies became interested," she said. "The companies talk to the same hematologists we do, and it's come up more than once that they have a very interesting myeloma antibody for multiple myeloma."

Werther said that "most companies in biotech have an inflated view of what they have. I talk to some very conservative hematologists and they don't hype things, and they [thought] this is a hidden gem. It does lend a view to think the company might be worth more in the future."

Facet shares slipped 97 cents, or 5.40%, to close Friday at $17.00.

Biogen shares rose 39 cents, or 0.81%, to $48.65.

PDL shares moved up 10 cents, or 1.47%, to end trading at $6.91.

National Oilwell deal-making ahead

On Tuesday, National Oilwell said it acquired two Asian private businesses serving the international oil and gas industry, Hochang Machinery Industries Co., Ltd. and South Seas Inspection Pte. Ltd., for $160 million in cash.

Houston-based National Oilwell designs, manufactures and sells equipment to the oil and gas drilling and production industry.

Ryan Fitzgibbon, an analyst with Pritchard Capital Partners LLC, told Prospect News on Friday that the company is expected to keep up its deal activity in the year ahead.

"National Oilwell Varco has $3 billion worth of cash. I think they will continue to make some acquisitions," he said.

"It's going to be more private acquisitions than anything as opposed to public companies on the service side," Fitzgibbon said. "Private companies need cash and [have] liquidity constraints, whereas most public companies have resolved their constraints with the banks and are free and clear and expect normalized earnings to go back in the next few years."

National Oilwell shares rose 12 cents, or 0.27%, to $43.94 on Friday.

Oil services firms to combine

In other deals in the oil and gas services industry, Superior Energy was upgraded to "add" from "neutral" by Capital One Southcoast, Inc. after the company said it will buy Hallin.

Shares of Superior Energy jumped $1.60, or 7.88%, to $21.90 on Friday, and shares of Hallin soared 102p, or 81.93%, to 226.5p.

Under the terms, Superior Energy will pay Hallin shareholders 233p in cash a share. Superior plans to finance the acquisition through its existing revolving credit facility.

The deal is expected to close in the first quarter of 2010.

Superior said the combination will enhance its emerging subsea well intervention market through the combination of its assets and Hallin's assets, which include remotely operated vehicles and chartered vessels.

Fitzgibbon, the analyst with Pritchard Capital Partners, said Friday that other companies in the industry are likely to seek out deals in 2010, but transactions are more likely to not include cash because stock prices remain low.

"I think people will be more interested in taking equity," Fitzgibbon said.

Mentioned in this article:

Biogen Idec Inc. Nasdaq: BIIB

Facet Biotech Corp. Nasdaq: FACT

Hallin Marine Subsea International plc London: HMS

National Oilwell Varco, Inc. NYSE: NOV

PDL BioPharma, Inc. Nasdaq: PDLI

Superior Energy Services, Inc. NYSE: SPN

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