A Medical Device Daily
Northstar Neuroscience (Seattle), a company developing device therapies for neurological diseases, said its board has rebuffed an unsolicited offer by its largest shareholder, Tang Capital Partners, to acquire the company for $2.25 a share in cash (Medical Device Daily, July 7, 2008).
Northstar's board said it reviewed the proposal from Tang, representing a 50% premium to the closing sale price of Northstar's common stock on July 1, concluding that the proposal "is not in the best interests of all shareholders."
The company said its management and the board will continue to work with the company's financial advisor, Leerink Swann, to "evaluate strategic alternatives."
The offer was an approximate 47% premium to Northstar's average trading price since Jan. 22, when the company reported its disappointing EVEREST clinical trial results. (MDD, June 10, 2008).
Hopes in the stroke sector had been running high for EVEREST, which was designed to determine whether cortical stimulation in conjunction with rehabilitation therapy would provide greater gains in hand and arm function for stroke victims and improve on daily living activities, compared to rehabilitation therapy alone.
Cortical stimulation therapy is a method for delivering low levels of electricity to the outer layer of the brain via an implanted stimulator.
At the four-week follow-up, 30.8% of the patients receiving cortical stimulation achieved the threshold of clinically meaningful improvement for the composite primary efficacy endpoint defined in the study protocol, compared to 29.1% of the patients in the control group. However, the primary efficacy endpoint required a 20% absolute difference between these two groups.
Further analyses of the components of the primary endpoint also failed to show a statistically meaningful difference between investigational and control subjects.
Last month, the company said it was moving forward with its PROSPECT feasibility study for cortical stimulation for depression.
Tang, the company's largest shareholders, holds about 18% of the company's common stock.
Northstar, founded in 1999, has 58 employees. The company has a market capitalization of $44 million.
Fresenius (Bad Homburg, Germany) said it has agreed to buy U.S. generic drug maker APP Pharmaceuticals (Schaumburg, Germany) for $3.7 billion in cash and assume outstanding debt and contingent payments, in a deal that Fresenius said will give the company more opportunities in the North American market for drugs administered intravenously.
Fresenius will pay $23 a share for APP, along with a registered and tradable contingent value right (CVR) that could result in as much as $970 million, or $6 a share, provided APP reaches profit targets from 2008 to 2010, the companies said in a statement.
The $23-a-share price is a 29% premium over APP's closing price on Thursday, the last day of trading in New York before the July Fourth holiday.
Fresenius will also assume all of APP's outstanding debt, totaling about $940 million, net of cash. In total he consideration for the acquisition of APP, including the CVR, could be up to $5.6 billion.
The controlling stockholders of APP have provided a written consent approving the merger.
APP will join Fresenius as part of its Fresenius Kabi division. Kabi will enter the U.S. pharmaceutical market and said it will achieve a leading position in the U.S. injectable generics market. The worldwide presence of Fresenius, combined with APP's market penetration in the U.S., will create substantial global opportunities for growth for both companies, the companies said.
"The combined company will allow for the rapid globalization of APP's portfolio, with the same high levels of quality and patient commitment for which we have become known, while at the same time providing a more comprehensive and complementary offering of injectable pharmaceuticals, devices and delivery systems to customers worldwide," said Patrick Soon-Shiong MD, founder and chairman of APP.
APP, which provides hospital-based injectable pharmaceutical products, employs some 1,400 workers and has production facilities in New York, Puerto Rico, Toronto and Illinois. Its drug portfolio includes more than 100 products used for oncology, intensive care and anesthesia, along with fighting infections.
Fresenius, a global healthcare group, produces $18 billion of sales in products and services for hospital, dialysis and in-home medical care.
In other dealmaking:
• Novartis (Basel, Switzerland) and Nestlé (Vevey, Switzerland) reported that they have completed the first-step purchase and sale of 74 million shares of eye care company Alcon (Huenenberg, Germany/Fort Worth, Texas) common stock currently owned by Nestlé pursuant to an agreement between the two firms.
With the completion of the first-step transaction, Nestlé remains Alcon's majority shareholder with about 52% of its issued capital; Novartis now owns a minority stake in Alcon of about 24.85% of Alcon's issued capital.
Via this first step, Novartis will pay Nestlé $11 billion (€7 billion). Novartis will then have the exclusive right to buy Nestle's remaining 52% stake in Alcon for about $28 billion (€17.8 billion) between January 2010 and July 2011. In that phase, Alcon's shares will be valued at about $181, though Nestle could get a 20.5% premium above the price for Alcon shares when finally sold.
While the second step is optional, both companies would have to agree not to exercise their rights for it to fall through.
With Novartis' investment in Alcon, Alcon's board expands from eight to 10 directors; the new directors are James Singh, Nestlé's executive VP and CFO, and Daniel Vasella, MD, Novartis' CEO and chairman.
• Biomagnetics Diagnostics (Orangevale, California) reported launch of the process to acquire other businesses.
It said it has secured acquisition capital and has contracted with Southbridge Business Resources (Tulsa, Oklahoma) to acquire deals for Biomagnetics.
The company said it is looking at six companies which Southbridge will be able to help it acquire, potentially bringing an additional $15 million or greater and EBITDA greater than 20% through acquisitions in 2008.
Biomagnetics, through its subsidiary, Biospectrum Technologies (Orangevale), has patented diagnostic equipment and assays designed to be qualitative, quantitative and easily performed.