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Does Biogen Idec have a Buyout Offer on the Table?

|Includes:Biogen Inc. (BIIB), ELN, JNJ

For the last year rumors of buyouts have been floated around on Biogen Idec, no surprise really given the constant pressure from corporate raider Carl Ichan.  Those rumors are likely pick up steam yet again after the earnings report from BIIB’s Tysabri partner ELN today.

 
Tysabri, the multiple sclerosis drug shared 50/50 with Ireland’s Elan Corp has been a torn in the side of Biogen for the last few years with infrequent reports of PML hammering the stock every few weeks. Tysabri is only the second drug ever pulled from the market by the FDA that was allowed back to market.  The stock soared last year on an expected buyout that eventually turned soar after cases of PML were reported.

 

Under the Tysabri agreement ELN has with BIIB should BIIB undergo a change of control (ie. merger or buyout) then ELN has the right to purchase BIIB’s 50% stake in Tysabri. In today’s Elan conference call ELN’s management team mentioned that Biogen Idec has approached them and offered $700m to purchase ELN’s right to the change of control clause. This large price tag for just the clause rights could suggest BIIB is about to merge or be bought and with Tysabri considered a lynchpin of any deal BIIB may be trying to tie up a potential deal breaker. Interestingly enough ELN mentioned that should there be a change of control at BIIB that JNJ has agreed to finance ELN’s purchase of Tysabri. The plot thickens. If news that BIIB has paid ELN surfaces you can bet a buyout of BIIB is just around the corner.

Disclosure: Long ELN
Stocks: BIIB, ELN, JNJ