Fund My Mutual Fund: Some Muss and Fuss over at Sequenom (SQNM)

Wednesday, January 14, 2009

Some Muss and Fuss over at Sequenom (SQNM)

Posted by TraderMark at 6:30 AM

I've asked mother market to drop Sequenom (SQNM) to $21 so I can reload the position - a bevy of limit orders waiting. Missed it by THAT much....

Remember this will be a news event driven stock - end of January test results will cause a quite substantial knee jerk reaction one way or the other.

Sequenom made a buyout offer for a small cancer test firm Friday.... 68% premium to closing price

Sequenom Inc., which makes genetic analysis products, said Friday it is offering Exact Sciences Corp. (EXAS) $41 million in a move that would expand its testing products. The all-stock deal for $1.50 in Sequenom shares represents a 68.5 percent premium to Exact's closing price of 89 cents on Thursday.
Sequenom said the offer would be subject to a floating exchange rate within a 15 percent collar, in which the price of Sequenom's common stock is between $20.74 and $28.06 per share.

....but looks like said firm - which apparently has 6 months of cash in the tiller - is playing hardball. I can only assume they have a pundit advising them... much like Yahoo (YHOO) or Sandisk (SNDK) who after rejecting offers of buyouts in 2008, turned into death spirals.

Cancer test maker Exact Sciences Corp. on Monday rebuffed a buyout bid from genetic analysis product maker Sequenom Inc., and analysts said the purchase isn't necessary for Sequenom -- meaning the company may choose to walk away.
Late Monday, the board of Exact Sciences rejected Sequenom's offer of $41 million, or $1.50 per share, because it was pursuing an alternative that is more valuable. Earlier in the day, however, analysts appeared to doubt that idea.
Oppenheimer analyst Kevin DeGeeter said the company is reporting minimal sales -- it reported negative $700,000 in revenue during the third quarter -- and has less than six months of cash left. That made other offers unlikely in his view.
DeGeeter said Sequenom's offer presented a "great deal" for Exact Sciences, but he said Sequenom does not need to complete the deal and will probably not chase Exact Sciences.
In announcing its offer Friday afternoon, Sequenom said cancer screening is an important field for the company. It believes Exact Sciences' cancer tests fit well with Sequenom's own MassArray genetic research systems and other DNA tests.
In a client note, Lazard Capital Markets analyst Sean Lavin said the deal would help Sequenom fulfill its goal of developing noninvasive cancer diagnostic tests. He wrote that Exact Sciences is one of the leading colon cancer diagnostic companies, and holds valuable patents. It also has relationships with key doctors, which could help sell its products, he said.
Lavin, who rates Sequenom at "Buy," believes that Sequenom would gain additional patent protection on its own products if it buys Exact Sciences' intellectual property. But he said the patents on SEQureDx should hold up even if no deal is made. "Contrary to some market chatter, Exact Sciences does not seem to have any IP that would prevent Sequenom from launching its Down test even if this acquisition does not go through," he wrote.