The Medical Technology Blog

Another short post today from The Medical Technology Blog, concerning Celgene’s proposed takeover of Abraxis. Please read on…

Faruqi & Faruqi, a New York securities firm, is investigating the Board of Directors of Abraxis BioScience for possible breaches of fiduciary duty and other violations of state law in connection with its attempt to sell the company to Celgene.

Under the terms of the transaction, Abraxis shareholders will receive US$58 in cash and 0.2617 shares of Celgene stock for each Abraxis share they own. The transaction has an upfront value of US$2.9 billion. Abraxis shareholders will also receive one tradeable contingent value right (CVR), which entitles its holder to receive payments for future regulatory milestones and commercial royalties. Based on the prior closing price of Celgene shares, the transaction values Abraxis stock at approximately US$71.93 per share.

The investigation focuses on whether the sales process leading up to the transaction was adequate and fair and whether the transaction undervalues the company to the detriment of Abraxis shareholders. In particular, Abraxis earned US$110.8 million in the first three months of 2010, compared with US$72.6 million in the first three months of 2009. Furthermore, Abraxis’ drug, Abraxane, is expected to earn US$1 billion by 2015 upon its approval to treat other cancers.

We shall keep a close eye on developments and keep you informed!

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