Investors fret as new regulatory probes spur fresh delays to Roche's $4.3B Spark buyout
Another day, another delay. On Monday, Roche revealed that in addition to the US Federal Trade Commission, the UK’s Competition and Markets Authority is probing the Spark Therapeutics takeover deal, triggering another delay of the $4.3 billion acquisition announced in February.
Spark shareholders now have until July 31 to tender their shares.
Since its last update in mid-May, the percentage of shares already sold inched up to 21.1% from 21%, lower than 26.1% and 29.4% registered on previous deadlines. These numbers are still a far cry from the 50% required to consummate the deal, but Roche has maintained it’s not unusual for “a significant portion of shareholders” to wait until the last days of the offer period.
“We think this is appropriate diligence by FTC but there is unlikely any major issue and the deal will close smoothly,” Jefferies analysts wrote in a note, noting that hemophilia market is crowded and that the way a gene therapy is engineered to work is a stark contrast to Roche’s existing Hemlibra hemophilia drug.
“If anything, the regulators should see the numerous competitors as positive for the market dynamics whereby price could potentially come way down over time and all the players will have to battle for patients (similar to Hep C market in that respect)…For these fundamental important reasons, we don’t see how this will be an anti-competitive merger and understand the regulators are thinking about it in the long-term,” they wrote.
Roche’s original deadline for the deal closing was set for the first half of 2019. “(I)t is unlikely that the transaction will close during the first half of 2019. The parties expect the transaction to close in 2019,” a Roche spokesperson tells Endpoints News.
Meanwhile the UK’s CMA has also opened an investigation into the proposed takeover to determine whether the deal could hurt competition in the UK. Pending the outcome of its investigation, the CMA has issued an interim enforcement order which precludes Roche from integrating Spark into the company, and stipulates the two maintain and operate the two businesses separately — for now. Both firms are cooperating with the CMA, they said on Monday.
“The issuance of an IEO does not of itself mean that the CMA has substantive concerns about the acquisition nor that the CMA has the legal power to intervene to impose conditions to the acquisition proceeding,” the spokesperson added.
Spark’s investors expressed their frustration with the latest delay, as the company’s shares $ONCE tumbled about 9% to $99.80 in early morning trading.
In a February Q&A document intended to placate employees, Spark suggested that Roche intended to allow the Philadelphia-based company to operate as an autonomous gene therapy specialist, while pouring in the resources to build a whole unit around it.
Image: Spark CEO Jeffrey Marrazzo at an Endpoints News breakfast panel at the 2019 JP Morgan conference in San Francisco – photo by Jeff Rumans for Endpoints News