COPENHAGEN/BRUSSELS (Reuters) - Denmark’s Novo Nordisk, the world’s biggest insulin maker, went public with a 2.6 billion euro ($3.1 billion) bid for Belgian biotech group Ablynx on Monday, seeking a new source of growth by bolstering its treatments for rare blood disorders.
Ablynx rejected Novo’s latest takeover approach and analysts predict the Danish group, whose new chief executive is trying to expand by buying drugs developed by competitors, might face counterbidders and would need to raise its bid.
Shares in Ablynx closed up 45 percent at 30.80 euros, above the 30.50 euros per share Novo has offered. The bid represents a 60 percent premium to the Belgian company’s share price on Dec. 6, which was before Novo’s first approach.
The unsolicited bid comes at a time of renewed interest by large drugmakers in smaller biotech firms, with U.S.-based Celgene clinching a deal to buy Impact Biomedicines for up to $7 billion on Sunday and Japan’s Takeda Pharmaceutical agreeing last week to buy another Belgian biotech group TiGenix for $630 million.
Ablynx said in a statement that its board “unanimously concluded that the proposal fundamentally undervalues Ablynx and its strong prospects for continued growth and value creation”.
It later said that Peter Fellner, its chairman since 2013, had decided to resign with immediate effect. It did not say why.
The Belgian group specializes in the research of novel drugs based on nano-bodies found in the immune systems of llamas and alpacas, for which it partners with several of the world’s largest pharmaceutical companies.
The main attraction for Novo is Ablynx’s experimental drug caplacizumab for the rare bleeding disorder acquired thrombotic thrombocytopenic purpura, which would complement Novo’s line-up of blood products focused on haemophilia.
The $11 billion haemophilia market is facing upheaval and Novo stands to lose sales following approval of a new Roche drug Hemlibra.
Biopharmaceutical treatments, led by haemophilia, make up around 20 percent of Novo’s sales, with diabetes and obesity products accounting for the remaining 80 percent.
“We have solid growth in our diabetes and obesity business but we are struggling a little bit to maintain the same level of growth momentum in biopharma,” Novo’s Chief Financial Officer Jesper Brandgaard said.
The Danish company said it would pay 28.00 euros per share in cash for Ablynx and an additional 2.50 euros in a so-called contingent value right (CVR) if certain conditions related to other drugs in Ablynx’s research portfolio were met.
An acquisition would be the first by Novo Nordisk CEO Lars Fruergaard Jorgensen, who took over a year ago. He has said the firm needs external innovation to broaden its product line-up.
Under previous chief executive Lars Rebien Sorensen, Novo sat out a spate of deal-making across the drugs industry and instead focused on its market-leading position making insulin and other diabetes treatments.
But in March, the company approached Global Blood Therapeutics, a U.S. biotech company focused on serious blood disorders, to discuss a potential takeover, people familiar with the situation said.
Finance chief Brandgaard said the current bid could be revised if Ablynx agreed to engage in talks.
“I think it would be natural to update the bid following a detailed discussion with the board of directors of Ablynx,” he said on a conference call, adding that it would be premature to speculate on any increase.
Brandgaard also played down the threat of an interloper, saying: “In terms of counter proposals it is not our understanding that any other bidder is pursuing the target.”
Ablynx had already rejected an offer by the Danish group on Dec. 14 and Novo Nordisk said the new bid, made on Dec. 22, was some 14 percent higher.
“Novo Nordisk regrets that the board of directors of Ablynx has so far declined to engage in any discussions, despite the proposals which have been put forward,” it said in a statement.
Analysts at Jefferies said they had a fair value of Ablynx at 29 euros per share, rising to 36 euros under a long term upside scenario.
“We envisage Novo needing to hike the offer and could see counterbids,” the analysts said.
Tax breaks and other incentives have created a thriving biotech industry in Belgium, with many companies spun off from university projects now listed on its stock exchange.
Ablynx’s shares have almost doubled in price in the past 12 months, buoyed by successful clinical trial data.
Its products, which are all still undergoing medical trials, target many different diseases such as rheumatoid arthritis, psoriasis or cancer.
Evercore is advising Novo, while JPMorgan is working for Ablynx.
($1 = 0.8353 euros)
Additional reporting by Stine Jacobsen in Copenhagen, Philip Blenkinsop in Brussels, Ben Hirschler in London and Abinaya Vijayaraghavan in Bengaluru; Editing by Keith Weir/David Evans/Alexander Smith