ANI Pharmaceuticals has made a cash offer for Egetis at SEK 11.25 per share, a 12.6% premium to yesterday's close of SEK 9.99. The total value is about SEK 5.3bn, including the convertible and the warrants. The Egetis board unanimously recommends the offer, holders of 42.2% of the shares have undertaken to accept, and the offer is not subject to any financing condition. The acceptance period should run from around 20 November to 18 December, with settlement around 29 December.
In our view, the price is low:
1. Thin premium. 12.6% is well below usual biotech takeover premia, and it is measured on a share price that already reflected the FDA approval (28 September) and the PRV sale (4 November).
2. The buyer gets the PRV cash. Net PRV proceeds to Egetis are about SEK 920m. After pro forma net cash of about SEK 1bn, ANI pays around SEK 4.3bn (about USD 430m) for Emcitate. That implies peak US sales of about USD 95m at 4x, or roughly 145 paid patients. The premium on the product itself is only about 10%.
3. The timing favours ANI. The offer comes before the first US sales, with a reported list price of about USD 950k per patient per year. ANI captures the regulatory de-risking without paying for the commercial upside.
4. Our valuation is higher. Our sum of the parts gives SEK 13.6 in the standalone base case, SEK 15 in our central scenario and about SEK 16 in a takeover at 5x base-case sales.
Why the offer is still likely to go through:
- Committed holders. The 42.2% who have committed are largely holders who funded the company at SEK 4.50 to 5.10 and are now more than doubling their money.
- Price ceiling. ANI states it will not raise the price unless a competing offer is announced, and under Swedish takeover rules that statement is binding.
The key point to check is the acceptance threshold. If the offer is conditional on 90% acceptance, the usual level for a Swedish squeeze-out, about 10% of the capital could block it. ANI would then have to waive the condition, or a competing bid would be needed to unlock a higher price. We also need to see whether the undertakings fall away in case of a superior offer. Both points should be in the offer document, expected around 20 November.
Happy to discuss.
Best regards,
Laurent Chekroun
+41 79 350 71 09