UPDATED: Facet Sneers at Biogen Idec's Low-Ball Offer...But Investors Might Not

(MoneyWatch)  Biogen Idec aired a bit of dirty laundry late Friday, going public with the details of its ongoing attempt to acquire PDL BioPharma spin-out Facet Biotech.
The background: Back in 2005, Biogen Idec signed an $800 million deal to get its hands on joint rights to a few of Facet's antibodies, chief among them daclizumab for multiple sclerosis.

The facts: On Aug. 17, Biogen Idec president and CEO James Mullen and Facet president and CEO Faheem Hasnain discussed combining their two companies. Mullen made it official on Aug. 21 by submitting a $15-per-share offer to Facet's board (Facet was trading around $10). Facet rejected the offer on Aug. 25, but the CEOs were scheduled to meet on Aug. 28.

That morning, Facet announced a $200 million in-licensing agreement with Trubion Pharmaceuticals. Mullen had previously said it was "very important" that Facet not undertake "any material, commercial or strategic transactions" during the acquisition negotiations. So the Trubion deal ruffled a few feathers ?€" enough for Biogen Idec to lower its offer to $14.50 and go public with all the sordid details.

He said/She said: Facet says Biogen Idec's offer is a low-ball. Facet reported $371.1 million in cash as of June 30. The upfront money shelled out in the Trubion deal is roughly equal to what Facet will earn early next year when daclizumab enters Phase III. So the $355 million Biogen Idec is offering essentially gives away the pipeline for free.

Biogen Idec says the $14.50-per-share acquisition price represents a 64 percent premium to Facet's recent stock price. Plus Facet's $230 million in lease obligations lower its cash value.

The bottom line: It depends on whether you think Facet is worth its market value or its cash value (a discrepancy facing lots of biotechs these days). The Facet board clearly thinks it's worth more ?€" they turned down $15 per share so it's not likely they'll take $14.50. (UPDATE: Facet did indeed reject Biogen Idec's second offer.) But investors holding shares recently worth $8 might think $14.50 looks good if Biogen Idec goes hostile and asks them directly.

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