Ferrer closes acquisition of Alexza Pharmaceuticals

Alexza logoAlexza Pharmaceuticals and Grupo Ferrer announced today that the acquisition of Alexza was successfully completed. It was pretty close though, just 9,031,157 shares were tendered in the offer which is 41.5% of the outstanding shares. Only because Grupo Ferrer already owned a bit more than 10% of the outstanding shares was the 50% threshold – needed for the successful completion of the merger – met. So while I thought that the CVR was priced very cheap the market was perhaps correctly pricing a relative high probability of deal failure. It’s totally possible that I got a bit lucky here, but no real way to know for sure. How valuable the CVR will be is something that I won’t find out anytime soon. The first milestone will take 5 years while the last ones will take 15 years. More than a little bit of patience will be required!


I guess I’m technically now only long the ALXA CVRs

9 thoughts on “Ferrer closes acquisition of Alexza Pharmaceuticals

  1. Bram de Haas

    The low % of tendered shares surprised me as well. You could also read it as a bullish signal, if so few people were willing to part with their shares at the huge premium paid, perhaps there is really a lot of value in the company and consequently also the CVRs. If the deal would have failed, it would also imply undervaluation. Maybe, I’m too positive and the reason is far more mundane.

    1. Alpha Vulture Post author

      Maybe, there was a large shareholder with 10% of the outstanding shares that indicated in a recent filing that they would seek appraisal rights instead of tendering. But that could also be more of a legal arbitrage instead of truly believing in the intrinsic value of the company.

  2. Mark

    Talk to you in 5 years. In the meantime, have you looked at the current Chineese going private situations (similar to the Wuxi Pharmatec of last year)? There are large spreads (eg. >4% for QIHU US) for deals where most approvals are done and expected close of less then 1 or 2 months away. The Chinese involvement is overly discounted, while most recent deals I looked at all closed (LONG US, DATE US).

    1. Alpha Vulture Post author

      As (almost) always I’m involved in some of those transactions, although I’m not long QIHU. And they don’t always succeed, YY failed recently for example and FGL has some troubles as well.

  3. Mark

    Of course they not always suceed. YY was withdrawn, but it was in an early stage without a definite merger agreement. I am not aware of a single deal that failed AFTER there was a definite merger agreement. Have you seen one? The juicy spreads are in the later stage deals.

  4. pietje

    As AV said, the FGL deal was definite but pulled back. I’m sure there are more. Also, quite a few deals take way longer than expected so the IRR is not always as great as it looks like. Chinese deals are definitely more risky than non-Chinese mergers imho.

    That said, I agree that it is a nice hunting ground, EJ, KUTV, DANG look reasonably attractive at the moment. No position in these at the moment though.

  5. Dan

    Interesting. I purchased at .9 exactly and I ended up selling with a decent profit. I sold for basically the reasons you outlined. Especially the fact that if the merger did not go through because ALXA would have gone bankrupt. In hindsight I was probably a little too cautious considering my small position size and the decent profit potential along with getting all of my money back within a short period of time.


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