Tercica: The huge premium biotech mergers continue (TRCA)
Tercica, Inc. (NASDAQ: TRCA) is another small cap biotech that has received a huge premium acquisition from a foreign buyer. This buyout is a 104% premium to the prior close and a 74% premium to the 3-month average.
The company has announced that Tercica will be acquired by Ipsen, S.A. where Ipsen will acquire all of the shares of Tercica common stock in a cash acquisition at a price of $9.00 per share.
The transaction is subject to approval by Tercica stockholders holding a majority of the outstanding Tercica common stock, but it has been unanimously Tercica’s Board of Directors. As Ipsen and its affiliates currently own approximately 25.3% of the outstanding shares of Tercica. Ipsen has also agreed to exercise its outstanding Tercica warrant and convert its outstanding convertible notes promptly following today’s agreement that will give Ipsen and affiliates approximately 42.7% of the outstanding Tercica common stock. Certain stockholders who collectively own 1.4% of the outstanding Tercica common stock have also executed voting agreements in favor of the transaction.
Based upon the huge premium and based upon the company already holding close to a majority ownership, this deal would seem a done deal. After the debt and other issues, this comes to a $663 million acquisition and its market cap is $492 million after today’s 99% share gains.
Ipsen intends to finance this transaction through a combination of existing internal financial resources and bank loan financing. The goal of Ipsen is to create a leading global endocrinology company with this acquisition. The company has only recently gone to a revenue stage company and analysts expected that it would post $33.3 million in revenues this year and $73 million in revenues next year.
Jon Ogg
June 5, 2008