In a surprising turn of events, Biogen’s acquisition of Reata Pharmaceuticals for $7.3 billion raised eyebrows among industry observers last month. However, recent disclosures reveal that Biogen was not the sole contender vying for the Texas-based rare disease specialist.
Before Biogen’s involvement, an unnamed “large-cap pharmaceutical company,” referred to as “Party A,” initiated discussions with Reata’s President, COO, and CFO, Manmeet Soni, in May, exploring collaboration prospects in Europe. Following an introductory meeting, a senior executive from Party A engaged Warren Huff, Reata’s CEO and Chairman, to discuss potential synergies between their businesses.
This initial spark escalated into a bidding war, ultimately leading to Biogen’s successful acquisition. The company extended a significant cash offer to acquire Reata, whose profile was bolstered by the approval of its Friedreich’s ataxia drug Skyclarys earlier this year.
The acquisition race commenced with Reata’s board acknowledging third-party interest, particularly from Biogen and Party A. Despite initial discussions, Party A’s initial offer of $140 per share in cash was deemed undervalued by Reata, leading the board to advise senior management to reject the proposition.
Biogen subsequently entered the scene, requesting a confidentiality agreement as explorations of “strategic opportunities” intensified. During this period, Party A increased its bid to $147 per share, yet Reata remained steadfast in its belief that the offer undervalued the company.
In a series of negotiations, Biogen and Party A continued to revise their proposals. Reata’s board determined that Biogen’s revised bid of $172.50 per share aligned with their valuation considerations, albeit with specific amendments required in the merger agreement.
The culmination occurred on July 27, when both companies presented their final offers and revised draft merger agreements. Biogen solidified its position with a $172.50 per share offer, while Party A presented $172 per share for Reata.
For Biogen, this acquisition grants access to Skyclarys, a potential $1.5 billion revenue generator by 2030, as estimated by analysts. Biogen’s CEO, Christopher Viehbacher, emphasized the strategic fit of Skyclarys with their existing portfolio, including Spinraza for spinal muscular atrophy (SMA) and recently approved Qalsody for amyotrophic lateral sclerosis (ALS).
The significance of this acquisition is underscored by Viehbacher’s recent appointment as Biogen’s CEO, with his seasoned dealmaking skills poised to navigate the company’s trajectory. In securing Reata, Viehbacher’s strategic maneuver marks a pivotal moment in shaping Biogen’s future endeavors.
