Thursday, April 10, 2008

Sayonara Millennium?

Boy, if today's news can't break me out of my blogging neglect, then nothing can. Japanese pharma Takeda is buying my old shop for a 50% premium, putting MLNM's share price to a level it hasn't seen since before the Cor merger mistake & market cap at a level unseen since the genomics bubble.

Reports are still coming in, but apparently Takeda is really buying the company -- it is not a raid for the pipeline assets but an attempt to get more or less the whole enchilada. Retention plans are rumored to be in place & it's claimed Dunsire will be staying on. On the other hand, time will tell if Sidney Street will soon feel like a tepanaki table (at least I got the cuisine right this time!) with the chef twirling a large cleaver. A lot of the key folks from Cor were supposed to drive MLNM forward, but they pretty much all bailed after a while.

Management always wanted to get a Japanese deal going, but nothing ever seemed to go beyond secretive hints. Finally, it comes in and it is the ultimate deal.

Many thoughts spring to mind, and perhaps I'll try to cover some later. But in particular, was this the result of a deliberate selling attempt or just some talks that blossomed? Two years ago MLNM refused to sell to an unnamed suitor (though one friend of mine joked about it with a lawyer at a local biotech & decided he'd love to play poker with the lawyer, given the size of the 'tell'); this time Takeda was apparently welcomed with open arms. It will be interesting to see what the merger materials say about the timeline of the deal.

Another key question is how tightly will Takeda attempt to integrate with Millennium? MLNM isn't the same loose place it was when the CEO dressed in drag every October (and just before I got there the high jinx bordered on Animal House), but it still had a soupcon of a laid back atmosphere. Last time I was in the lobby there was a display of each year's T-shirt; not your usual corporate display. I haven't had much dealing with Japanese companies, but this certainly doesn't fit the stereotype. Perhaps Takeda will see the wisdom in a largely hands-off approach, much like Warren Buffett does with his acquisitions -- the parent company funds the subsidiaries but otherwise just acts like a typical board member (though with Buffett, that's still a bit activist). Notable Buffett companies include a prominent local furniture store (where you can go to the movies or try to get free furniture if the Sox sweep the Series again) and the one insurance company unafraid to admit to a reptilian quality.

On the other hand, in theory the greatest value comes from integrating -- cross synergies, reduced duplicative effort, etc. My skepticism of such an approach scales with the distance both physical & cultural, so I doubt it would work. I've recently heard from a former colleague now in a large multi-national pharma how badly its integrated, and it's a company which has had years to do so & common language and nationality.

In any case, I'm sure the weekly sushi day in the cafe will be more popular than ever.

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