Neuren Media and Analyst Coverage, page-1503

I think the takeover price perceived credibility gap ($50 v. $500) is likely related to the size of the premium represented.

I’ve gone back through a list of biotech acquisitions since 2018 for which the premium paid was disclosed. While the highest premium paid was 667%, this was for a company which was acquired for less than $100m. All other examples in which premiums of 300%+ were paid were also associated with relatively low value deals.

The highest premium paid in a higher value deal was 273%, paid by Sanofi in 2023 to acquire Provention Bio. Sanofi offered US$2.9bn, or US$25 per share, when the previous day closing price was US$6.70, although the share had been trading at up to US$10 + in the months immediately prior to the acquisition offer. Prior to the offer, analysts had price targets for the company’s shares ranging from US$16 to US$30.

A similar premium paid on the current NEU share price would amount to A$53.70 per share, which is remarkably close to the A$50 per share that a number of posters on this forum have stated they would be willing to accept.

Of course, acquisition prices should be based on DCF valuation, not on a rate of premium to the current share price and Jon Pilcher has stated as such.

Yet, the inescapable and unpalatable truth is that when takeover offers are made, it is the size of the premium being offered to the share price that is always foregrounded, never what the offer represents compared with the calculated DCF.

As the 273% premium paid by Sanofi represents the highest premium paid in a more sizeable biotech acquisition since 2018, any takeover offer of A$54 per share or more, at this current time, would be unprecedented.