NEU (ASX) Share Price

Originally posted by Kjt1969: ↑

I think everything you've said is spot on if there’s only one bidder.

If you’re the only bidder you will of course try to buy as low as you can. It will make sense to base your initial bid on a premium to the current share price hoping shareholders will accept it.

As you’ve said, even if your internal valuation is $100 (ie it would still be worth it to you acquiring Neuren at this price) you certainly won't offer this price if you can get away with a much lower value.

And I suspect it's likely most Neuren shareholders would accept an offer at a 75% premium which might be around $40-$50.

But if there are multiple bidders then the above reasoning is no longer valid.

If there’s multiple bidders that the board and shareholders consider are all equally capable in their ability to fulfil their offer then the calculation for a bidder becomes – what’s the value I can bid that is no higher than my internal valuation AND is higher than the other bids?

If 3 bidders internally value Neuren at $90, $100 and $110 respectively, then all else being equal bidding would theoretically finish at $101, the price at which only 1 bidder is left willing to pay. The initial share price will have little to do with this.

Of course, if you’re talking about an unusual asset that could make a significant difference to your future revenue and market position - one that might allow you to dominate a huge new under-served market (CNS disorders anyone?) and significantly increase your business size long term then other factors come into play. Because if you lose this asset to a key competitor the damage is doubled. You lose X and they gain X. The difference between winning and losing is now 2X. If you lose you could be handing your competitor a major advantage against you in the market going forward.

This is why in some spaces (particularly tech, the area I'm familiar with) bidders can pay way over the odds simply to stop an asset falling into a competitors hands.

Another factor that could mean a bidder may go well beyond their comfort level (ie well beyond their internal valuation) is because they’re desperate to maintain their existing business size and pretty much have to do whatever it takes to achieve this. I understand many large pharma are facing looming patent cliffs, meaning they may not have the luxury of waiting to pick the most profitable deals (i.e. the ones where they get to buy at a low price). If they have to replace $50 billion of revenue by an immovable deadline (patent expiry dates) then the closer those dates come the more willing they will become to take risks - ie pay over the odds, just to keep their business from going into decline. Their shareholders will not be happy if they do otherwise.

Neuren does appear to own such a market making asset. NNZ-2591 is not just drug that treats another obscure type of cancer.

If Neuren management know that Neuren is worth $100+ to large pharma they have a fiduciary duty to do whatever it take to try and extract this amount from these guys for shareholders.

For all the above reasons I suspect when it comes to a takeover that there will be many bidders and Neuren management will then organise a tender or something similar (someone mentioned Jon asking Big Pharma to please form an orderly line ). I believe the final T/O offer will be over $100 and there is a good chance it may be $250 or more (US$20b).

If Neu wait for the next 3 Ph 2 results (which you’d have to say now seem more likely than not to all be positive) AND we get yet more runs on the board with Daybue in the meantime, I suspect we’ll already be at $50 by late next year so a $100 TO offer will no longer upset those people worried about high takeover premiums!

Expand

Kjt1969: "For all the above reasons I suspect when it comes to a takeover there will be many bidders and Neuren management will then organise a tender or something similar...... I believe the final T/O offer will be over $100 and there is a good chance it may be $250 or more (US$20b)."

An interesting post by Kjt1969 today on Christmas Eve's day. Thanks.

Could someone PLEASE post a list of BIG PHARMA companies that have the funds/ability of making take-over bids in the territory of US$ 10 - 20 billions - it must be a fairly short list ! As to my knowledge, only fairly few have this kind of "spare funds". TIA.
I also wonder if the NEU management is/will really clearly just approaching such companies?

About big BP that have funds and need new success stories due to not having had a lot of success with their own in-house developments in recent years, I can only think of one right now, which is (IMO - correctly or wrongly!) in this situation: Novartis.

Comments/explanations (ideally with detailed information) will be most welcome.

Wishing all a NICE CHRISTMAS ahead.

wasa

(20min delay)
Last $14.05		Change -0.510(3.50%)		Mkt cap ! $1.795B

Open	High	Low	Value	Volume
$14.38	$14.42	$13.94	$6.419M	454.6K

No.	Vol.	Price($)
1	500	13.990
1	300	13.970
1	1432	13.950
2	1230	13.900
1	720	13.890

Price($)	Vol.	No.
14.420	175	1
14.500	2985	2
14.800	2850	2
14.860	500	1
14.960	445	1

Share Price, page-8682

Actinogen Medical ramps up Alzheimer’s treatment trials, targeting fast-track global approvals

Coda Minerals (ASX:COD) enters rights issue to further exploration in South Australia

Cokal upgrades infrastructure for BBM ramp-up in Indonesia

Buxton projects new graphite province discovery at WA Narryer play

BCI reaches close of funding facility for salt-first part of Mardie project

Recce eyes Indonesia for novel anti-infective as Indo-Aus ties grow stronger

Solstice Minerals to ramp up drilling campaign at Yarri Gold Project

White Cliff jumps 24% on 'bonanza grade' copper rock chips at Rae project, Canada

Neurotech knocked back by FDA as agency declares target condition not rare enough for special status

Week 40 Wrap: China's nonsensical stimmy hype wanes (shocking!); HotCopper's picks; oil & inflation

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News

Share Price, page-8682

Top Stories

Actinogen Medical ramps up Alzheimer’s treatment trials, targeting fast-track global approvals

Coda Minerals (ASX:COD) enters rights issue to further exploration in South Australia

Cokal upgrades infrastructure for BBM ramp-up in Indonesia

Buxton projects new graphite province discovery at WA Narryer play

BCI reaches close of funding facility for salt-first part of Mardie project

Recce eyes Indonesia for novel anti-infective as Indo-Aus ties grow stronger

Solstice Minerals to ramp up drilling campaign at Yarri Gold Project

White Cliff jumps 24% on 'bonanza grade' copper rock chips at Rae project, Canada

Neurotech knocked back by FDA as agency declares target condition not rare enough for special status

Week 40 Wrap: China's nonsensical stimmy hype wanes (shocking!); HotCopper's picks; oil & inflation

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News