Life Sciences Transactions on the Rebound in Massachusetts?

November 2009

As was the case with virtually every other industry group, merger and acquisition activity in the life sciences space fell significantly from 2007 levels during 2008 and the first part of 2009. As measured by the number of announced transactions, activity for the year ended December 31, 2008 was down almost 90 percent compared to the year ended December 31, 2007. Early data from the first two quarters of 2009 show that the M&A activity during this period was on a 2008 pace as well. However, the recent surge in announced transactions involving Massachusetts companies suggests that transaction activity in the life sciences space may be on the rebound.

Recent M&A Activity

On September 21, 2009, Inverness Medical Innovations of Waltham, MA announced that it would purchase Free & Clear, Inc. of Seattle, Washington in a deal valued at as much as $130 million. Free & Clear is a privately-held company that designs online and phone-based programs that support smoking cessation and healthy living initiatives. This is the first deal announced by Inverness during 2009; in contrast, the company completed 12 transactions during 2007.

In addition, Biogen Idec, Inc. of Cambridge, MA recently launched an all-cash tender offer for the outstanding shares of Facet Biotech Corp. of Redwood City, CA. Facet has been a development partner with Biogen on multiple sclerosis and cancer drugs. The unsolicited bid was for a price of $14.50 per share, and came after Facet’s board rejected a friendly offer from Biogen. In a hostile tender offer, the buyer makes the offer to buy shares directly to the shareholders of the target, without the backing of the target’s board. On October 16, Biogen extended the tender offer through December 16, 2009.

On September 28, Covidien announced that it had agreed to acquire publicly traded Aspect Medical Systems, Inc., for a price of $12.00 per share. The total transaction is valued at ap- proximately $210 million. Aspect Medical focuses on brain monitoring technologies, and its products will be sold through Covidien’s Oximetry and Monitoring division. The transaction is expected to close on December 31, 2009.

This uptick in announced activity is a welcome departure from the slow pace of deals in 2008 and early 2009. As these deal represent a broad spectrum of industry sectors (biotech, medical devices and services), they may signal a rebound in transaction activity industry-wide.

For more information on merger and acquisition transactions, please contact Mark J. Tarallo.

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