Biogen Abandons Search for Buyer; Shares Plunge

Biogen Idec Inc. (BIIB) announced late Wednesday it is abandoning its search for a suitor, sending its shares tumbling 27% to $55.51 in AH trading. The drop wiped out $6 billion in market value, or nine months of gains. The biotech company, which manufactures Avonex and Tysabri for multiple sclerosis and Rituxan for cancer and rheumatoid arthritis, put itself on the block in October. Earlier in the year, activist investor Carl Icahn took a 3% stake. The company began hunting for a buyer at the urging of Icahn, who said he might pay in the "high 70s to low 80s" per share for the company himself -- though he ultimately withdrew his expression of interest.

Had Biogen sold, it could have been the biggest biotech takeover ever, but the surge in stock price on buyout speculation priced the company out of the market. In October, Caroline Stewart of Piper Jaffray was quoted in Fortune as saying the stock price, which had soared into the mid-$80s, made no sense. "It's crazy to suddenly say the stock is worth $20 more just because Carl Icahn says it is," she said. The interest of prospective buyers might also have been dampened by heightened regulatory scrutiny of Tysabri, which has been linked to a brain disorder. "[Biogen] didn't really have a choice except to be as a standalone," Stewart said.

Sources: Press release, AP, Wall Street Journal, Fortune, Reuters

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