Are Alder Shareholders Getting Enough in the Buyout?

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Alder BioPharmaceuticals Inc. (NASDAQ: ALDR) shares skyrocketed on Monday after the firm announced that Lundbeck would acquire it. The transaction is valued at up to $1.95 billion net of cash and is expected to close in the fourth quarter of 2019.

Under the terms of the agreement, Lundbeck will commence a tender offer for all outstanding shares of Alder, whereby Alder stockholders will be offered an upfront payment for $18 per share in cash, along with one non-tradeable contingent value right that entitles them to an additional $2 per share upon approval of eptinezumab by the European Medicines Agency, representing a total potential consideration of $20 per share.

The upfront cash consideration represents a 79% premium to Alder’s shareholders based on Friday’s closing price and an approximately 3% discount based on the 52-week high share price.

The proposed transaction is anticipated to significantly strengthen Lundbeck’s business as early as 2020, accelerating the build of Lundbeck’s late-stage pipeline and providing access to new capabilities in the monoclonal antibody field.

The addition of eptinezumab will expand Lundbeck’s leading global brain disease franchise. Lundbeck intends to leverage its proven expertise in neuroscience to maximize the opportunity to serve patients suffering from brain diseases, including migraine.

Dr. Deborah Dunsire, president and CEO of Lundbeck, commented:

Alder is an excellent strategic fit for Lundbeck’s focused expertise in brain diseases and organizational capabilities. This transaction flows from our strategic intent to Expand and Invest to Grow. Migraine prevention is an attractive indication for us that leverages our specialized commercial expertise in delivering medicines for brain diseases. We expect the global launch of eptinezumab for the preventive treatment of migraine, as well as the further potential development of the product in additional indications, to accelerate Lundbeck’s growth in the coming years.

Shares of Alder closed Friday at $10.06 but were up about 85% at $18.57 in early trading Monday. The 52-week range is $8.39 to $18.15, and the consensus price target is $19.20.


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