Answer 1 is correct. Somatogen will cease to exist as separate company. Somatogen shareholders will receive $ 9 worth of Baxter stock, based on average price of Baxter stock,from Day 1 thru 10, 15 days preceeding the closing of the transaction. In addition the stockholders of record on the closing will receive a royalty of 5% based sale of Somatogen products thru year 2007, but maximum of $2 per share.
Clearly Baxter got Somatogen for less than price of peanuts. Tim Hoogheem, VP of finance told me that Lilly had signed on the deal, removing the possibility that Lilly will come with higher bid. Amgen could have but I doubt it now. Dr. Rathman, cofounder of Amgen is on Somatogen board. If Amgen wanted to bid, they would have grabbed it.
The only winners in this deal are Baxter and patients. Baxter got the great Technology for peanuts. Somatogen board was pressed for cash and under lot of pressure. Biggest losers: Lilly and Somatogen stockholders. When Baxter brings this multi billion product to market with Somatogen technology, somebody at Lilly should be held accountable, just like Lilly junking their Cardiac Devices division as under performing (Guidant, went from 14 to 144, split adjusted). What a blunder by Lilly !!! Only one consolation. This is validation of Somatogen technology. Baxter will pursue the program aggressively and bring the recombinant Hb to market. At least the patients will benefit.
Bharat H. Barai MD |
