Transkaryotic Therapies has sent an open letter to its shareholders, urging them to vote in favour of Shire Pharmaceuticals’ proposed $1.6 billion dollar takeover of the company.
In the letter, TKT’s board of directors highlighted that the company is currently generating “substantial losses,” adding that this is expected to continue throughout 2006, and possibly beyond. If it remains independent, the company would end 2005 with between $40 and $60 million in case. “If the merger is not consummated, we would anticipate needing to complete a significant financing by the fourth quarter of this year,” the directors cautioned. They explained that they rejected Shire’s first two written offers of $29 to $31 per share as inadequate, and suspended negotiations until the UK company was “willing to commit to an attractive valuation.” It ultimately accepted $37 per share, and maintains that the deal is in the shareholders’ best interests.
The proposed deal has come under fire from a key TKT shareholder, who criticised the price tag for not adequately reflecting the firm’s value, which it believes has increased substantially in the wake of the release of positive data from a key trial of its Hunter syndrome drug [[21/06/05c]], [[04/07/05d]].
The TKT stockholder vote will be held at a special meeting on July 27 and the transaction is expected to close during the third quarter of the year.