Genentech OKs latest bid; bidding war on way for CV Therapeutics; CF Industries pushes for Terra deal

By Cristal Cody

Tupelo, Miss., March 12 - Genentech Inc. shareholders should accept the latest increase in a bid from Roche Holding AG to acquire the remaining 44% of outstanding shares of the South San Francisco, Calif.-based pharmaceutical company, analysts said Thursday.

Gilead Sciences, Inc. may be the white knight today with a $1.4 billion offer for CV Therapeutics, Inc., but tomorrow's another story with a bidding war expected from Astellas Pharma Inc., an analyst told Prospect News.

CF Industries Holdings, Inc. continues to push its agenda for a hostile takeover of Terra Industries Inc., though market sources don't give the effort much chance for completion.

Wall Street managed a three-day rally that sent the Dow Jones Industrial Average back up above 7,000 points on Thursday.

The Dow gained 239.66 points, or 3.46%, to close at 7,170.06.

The Standard & Poor's 500 index rose 29.38 points, or 4.07%, to 750.74, and the Nasdaq Composite index added 54.46 points, or 3.97%, to end the day at 1,426.10.

Going once, twice, sold

Roche and Genentech announced that the two companies reached an agreement for the buyout for $46.8 billion, or $95.00 a share, in cash.

Analysts had predicted another bump up to $96.00 a share after the Basel, Switzerland-based drug maker offered $93.00 a share last week.

Franz B. Humer, chairman of the Roche Group, said in a statement that he is "delighted that the intensive negotiations have led to a successful conclusion. Working together, we aim to close the transaction quickly, thus removing uncertainty for employees and allowing us to focus even more intently on innovation and long-term projects."

Roche said it will eliminate financing conditions to the offer, which expires March 25.

About 2.9 million shares of Genentech have been tendered as of Wednesday, according to Roche.

Shares of Genentech rose $1.75, or 1.90%, to close Thursday at $93.92.

CV's tug of war

CV Therapeutics, which has been fighting a $16.00-a-share hostile takeover attempt from Tokyo-based drug maker Astellas Pharma, agreed to the buyout from Gilead for $20.00 a share in cash.

The board of directors of Palo Alto, Calif.-based CV Therapeutics has unanimously approved the Gilead transaction.

Derek Taller, an analyst with the Benchmark Co., said in an interview that Astellas probably will not slink away on the news.

"I think we'll see a competitive bid," he said. "Astellas already has gone hostile."

Taller estimates another bid forthcoming for CV Therapeutics at $22.00 a share.

The company's stock supports that line of thinking.

Shares of CV Therapeutics soared well over the bid Thursday to gain $5.04, or 31.50%, to close at $21.04.

Gilead's stock gained 39 cents, or 0.89%, to close at $44.43.

Astellas spokesman Andrew Cole told Prospect News that the company has no comment at the moment.

When the deal was announced early Thursday, it was still the middle of the night in Japan.

Executives of Foster City, Calif.-based Gilead said on the conference call Thursday that the company is committed to the deal and plans to finance the buyout with available cash on hand.

The offer is contingent on antitrust clearance and is expected to close in the second quarter of 2009.

While CV Therapeutics' drugs center on the treatment of cardiovascular diseases, Gilead focuses on treatment for HIV, hepatitis and other illnesses.

"CV Therapeutics' experienced management team has built a portfolio of marketed and investigational products that address significant unmet medical needs, and that represent a strategic fit with Gilead's capabilities and focus," John Martin, chairman and chief executive officer of Gilead, said in a statement.

Three-ring fight

While CF Industries pushes for its takeover of Terra, analysts suspect that the fertilizer maker is more likely to be acquired through the $3.6 billion hostile takeover offer from Agrium Inc.

Agrium, a Calgary, Alta.-based fertilizer maker, has said it plans to launch an exchange offer for CF Industries' outstanding stock at $72.00 a share, which includes $31.70 in cash and one share of Agrium for each share of CF Industries.

On Monday, CF Industries raised its offer for Terra to a stock deal valued at $27.50 a share, up from the $20.00 a share the phosphate fertilizer maker first offered.

CF Industries also said it structured the deal to avoid a vote from its shareholders.

"Although CF has taken away the ability of CF shareholders to vote on the Terra acquisition, Agrium has said that it intends to take its offer for CF directly to shareholders," an analyst said Thursday. "This gives CF shareholders a say, regardless of the structure of CF's bid. We believe that Agrium's track record in acquisitions shows that it is willing to aggressively pursue acquisitions."

Deerfield, Ill.-based CF Industries filed preliminary proxy documents with the Securities and Exchange Commission on Thursday in connection with its fight to replace three of Terra's board members.

"We remain firmly committed to combining CF Industries and Terra, and believe that this combination is in the best interests of both companies' shareholders," Stephen Wilson, chairman, president and CEO of CF Industries, said in a statement.

Sioux City, Iowa-based Terra makes and sells nitrogen and methanol products for the agricultural and industrial markets.

Terra said in a letter sent Wednesday to CF Industries that the company is not interested in the updated offer.

"Our board has unanimously concluded that this most recent version of your proposal continues to run counter to Terra's strategic objectives, substantially undervalues Terra both absolutely and relative to CF, and would deliver less value to our shareholders than would owning Terra on a stand-alone basis," Terra said.

Shares of CF Industries fell 78 cents, or 1.14%, to close at $67.38 on Thursday.

Terra's stock gained $1.35, or 5.39%, to end trading at $26.40.

Agrium shares lost 82 cents, or 2.21%, to close the day at $36.23.

Mentioned in this article:

Agrium Inc. NYSE: AGU

CF Industries Holdings, Inc. NYSE: CF

CV Therapeutics, Inc. Nasdaq: CVTX

Genentech Inc. NYSE: DNA

Gilead Sciences, Inc. Nasdaq: GILD

Roche Holding AG Swiss: RO

Terra Industries Inc. NYSE: TRA

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