Cell Genesys (CEGE) Message Board

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Biotech / Medical : Cell Genesys (CEGE)

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To: Ken Reidy who wrote (655)	12/19/1999 11:53:00 AM
From: Mark Bong	Read Replies (1) of 1298

CEGE now worth $18 per share CEGE owns about 3.4MM shares of ABGX making the value of their holdings worth $400MM, or about $12.25 per share of CEGE. If you go back to the original deal with GENZ, ABGX was valued at about $4 and CEGE was valued at about $6 exclusive of the value of their ABGX holdings. In other words, for the original $10 CEGE offer by GENZ, CEGE was worth about $6 without ABGX and $10 with ABGX. Now that the ABGX valuation has increased dramatically, CEGE is worth over $18 per share to GENZ. I am certain that the $10 offer will be modified, and both CEGE and GENZ know it. The options are as follows. 1). Vote down the GENZ offer or pay the breakup fee. 2). GENZ increases its offer to appx. $18. or 3). GENZ offers $6 for each CEGE and gives the CEGE owners the ABGX stock that CEGE currently owns which would be equal to the current valuation of appx. $12.25 per CEGE share or whatever that will be at the time the transaction has a financial close. In all fairness to the GENZ and CEGE management staff, you can't change your offer every day, so they are waiting to see where all of this shakes out regarding the ABGX valuation. Also remember that CEGE has $60MM in cash, or about $2 per share. I expect some decisions after the New Year begins. I also think that GENZ is undervalued at the current price. They would make a good takeover candidate and could easily fetch $60-65 per share. I hope that any change in the formula with GENZ permits a narrower band that reflects GENZ at their current value plus or minus $5. I don't like the wide band that would allow GENZ to go up to $55 without an increase in the CEGE price of $10. I think that the bank should be $33 to $43 and not $31.5 to $55 and reflecting GENZ's current price of $38. CEGE made a dumb deal allowing a spread this wide in the transaction formula. My opinion! Any other thoughts?

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