Neos Therapeutics Jumps After PDL BioPharma Makes an All-Cash Take Out Offer

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Shares of NEOS Therapeutics have soared more than 38 percent this morning after PDL BioPharma, Inc. announced its intention to acquire the company in an all-cash deal that could total about $287 million.

PDL BioPharma announced it offered to acquire the Texas-based company for $10.25 per share, which represented a 40 percent premium from the Oct. 25 closing price of $7.33. After news of the offer hit the streets, share prices for Neos hit $10.15 as of 11:11 a.m.

This is the third time that PDL has approached Neos about a deal. The Nevada-based company first offered to acquire Neos in June for $10.25 per share. The Neos board of directors rejected the offer, PDL said in its announcement this morning. Days later, Neos announced it was offering $30 million in shares of common stock at a rate below the PDL proposal, about $6.25 per share.

After Neos, a company specializing in ADHD medicines for children, made its move, PDL noted that it once again reached out to Neos with its offer of $10.25 per share. That was again rejected. Now PDL said it was making its third offer public so Neos’ shareholders would know about the good-faith offer and “so that Neos shareholders can decide what is in their best interest.”

“We believe Neos shareholders should not be denied the opportunity to consider our all-cash proposal of $10.25 per share,” PDL said in a letter to the Neos board of directors, which it made public this morning.

For its part, PDL said the acquisition of Neos is consistent with the company’s growth strategy. Additionally, PDL BioPharma said it’s a “logical next step” in the execution of its strategic plan. PDL said an acquisition of Neos will create an “attractive pediatric platform and foundation for future growth.” PDL controls about 5 percent of Neos common stock.

“PDL has high regard for Neos' organization and sales force and believes that the addition of PDL's greater resources will add substantial value to currently marketed treatments over a shorter period of time as well as accelerate the development of additional products,” PDL said in its announcement. “Based on its due diligence, PDL's Board of Directors strongly believes that PDL's backing and substantial financial resources would greatly augment the performance of the Neos product portfolio and allow more patients to benefit from Neos' products.”

PDL said it will maintain its offer for a period of 14 days. In its announcement, the PDL board believes that is a substantial amount of time to make a decision given the previous attempts since June to acquire the company. With appropriate engagement from Neos' management, PDL is ready to finalize diligence and conclude the transaction within a short time.

Investors in PDL BioPharma have not responded positively. Shares are down more than 7 percent this morning, falling to $2.98 as of 11:29 a.m.

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