by ginning up an acquisition. “Breaking up Biogen Idec in order to facilitate a sale is not, in itself, a business strategy,” the company said.
Specifically, Biogen said it doesn’t need to break into two parts to attract an acquirer. If it did such a thing, there would likely be only one buyer for Biogen’s cancer unit, the company said, meaning the unit would be unlikely to attract multiple bidders who would pay a premium for it. (Biogen didn’t name which company might want to buy its cancer assets, but said only that it would be a cancer-focused company.)
A breakup would also throw a wrench into collaborative R&D agreements, and could have tax implications, the company said. It would drive up R&D spending as a percentage of sales by 4 percent, and cause sales and administrative costs to climb 14 percent, the company said. It would nullify the company’s ability to take advantage of global facilities. Then there are intangibles to consider. “Having a perpetual “for sale” sign is detrimental to employee morale, recruiting senior staff, and business development opportunities,” Biogen said.
One of the harshest comparisons Icahn made in his earlier filing was how poorly Biogen stacks up against peers like Genentech and Gilead Sciences in terms of stock price gains in recent years, as well as in R&D productivity. Biogen’s response was that many of those companies are successful because they have product diversity, and aren’t overly dependent on one product or product line. Being integrated and diversified gives it a better chance to compete, the company said.
