Astex Pharmaceuticals Inc. (ASTX) shareholder Sarissa Capital Management LP won’t tender its 5 percent stake to Otsuka Holdings Co. and questioned the integrity of the $886 million sale process.
“The recently announced merger transaction with Otsuka Pharmaceutical significantly undervalues Astex and therefore we do not intend to tender our shares,” Sarissa’s Alex Denner and Richard Mulligan wrote today in an open letter. The investors said they plan to contact other potential bidders.
Astex, maker of the blood-cancer drug Dacogen, said Sept. 5 it accepted a bid of $8.50 a share from Tokyo-based Otsuka. The shares have closed higher than the offer on all but three days since, indicating investors expect a higher price. Dublin, California-based Astex rose 1.5 percent to $8.63 at the close of New York trading.
Sarissa, the fund Denner started with Mulligan after leaving the firm of billionaire investor Carl Icahn in 2011, contended in the letter that Astex didn’t reach out to all potential acquirers and may have sought a deal that preserved the company’s structure rather than drawing the highest price for shareholders.
Astex’s board negotiated with Otsuka and spurred the Japanese drugmaker to raise its offer to $8.50 a share from an initial bid of $7.75 a share, the company said today in a statement. That followed a process in which Astex contacted 33 drug companies to gauge their interest in a strategic transaction. Five companies signed non-disclosure agreements and reviewed Astex’s financial and product information, and Otsuka was the lone bidder, Astex said.
“We thoroughly examined the Otsuka offer, firmly believe that it is in the best interests of Astex stockholders, and unanimously recommend that stockholders tender their shares,” Astex’s board said in the statement.
If Astex investors don’t tender enough shares by Oct. 10, Otsuka must extend the offer for at least 10 days, Sarissa said.
“This process at least offers an opening to potential bidders who were shut out or wary of the process to engage with the company,” Sarissa said. “We are reaching out to potential bidders who we believe were left out of the process.”
Astex’s pipeline includes SGI-110, which in August produced results in a mid-stage study in acute myeloid leukemia that drove the stock up 24 percent in one day.
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