Galenica to Acquire Relypsa for $32 per Share (RLYP)
Galenica has announced a tender offer to acquire all shares of Relypsa for $32 per share which on a fully diluted share basis is $1.53 billion. The Boards of Directors of both Relypsa and Galenica have approved the terms of the merger agreement, and the Board of Directors of Relypsa has resolved to recommend that shareholders accept the offer. While it is possible that another bidder could emerge, I think it is unlikely. I intend to tender my shares.
I first recommended Relypsa on February 16, 2016 at a price of $14.98 in a report called New Buy Recommendation on Relypsa (RLYP, Buy, $14.98). and have consistently recommended it is eight additional reports since then. So this recommendation worked out well. The potential for a buyout was part of my investment thesis, but I thought that if Relypsa could remain independent until Veltassa led to profitability that the payoff could have been much higher for shareholders. Oh well.
I suspect that the hurdles put in place by managed care for the Veltassa launch were more than management anticipated and they may have feared that they would have to raise a lot more capital to reach profitability. This could have diluted shareholders. The Galenica offer is the low risk option for management and shareholders.
For those of you who follow my work, you know that I make a lot of mistakes, but it is always gratifying to get a stock right, especially in the current tough market for small biotechnology companies. I remember about a year and one half ago listening to presentations from Relypsa and ZS Pharma who were both in late stage development of drugs for hyperkalemia and I was convinced that this was a huge market opportunity in which both companies could win. I recommended ZS Pharma in April 25, 2015 at a price of $40.97. See the report Initiation Report on ZS Pharma (ZSPH, Buy, $40.97). ZS Pharma was acquired by Astra-Zeneca on November 8, 2015 at $90 per share. Looking back, attending those year and one half ago presentations worked out well for me and subscribers.
Prompted by this, I went back to see how many companies that I have covered have been acquired since I started writing on my website in 2011. Here is the list of companies I was actively involved in that were taken over: Adolor, Anadys, Cadence, MAP Pharmaceuticals, Santarus, Somaxon, Trius, ZS Pharma and now Relypsa. Remember this the next time one of my recommendations blows up which is an inevitability in the universe of stocks that I cover. Sometimes I get it right.
Tagged as Relypsa, Relypsa takeover, RLYP, Veltassa + Categorized as Company Reports, LinkedIn
larry, it’s great to be human! I remember a framed quote on the wall in the office of an analyst, “When I am right, no one remembers. When I am wrong, no one forgets!” ha ha
Hi Larry,
We all make mistakes, but you make fewer than most and your ethics are commendable 🙂 Thanks to you, I just sold with a 118% gain. Not too shabby.
Keep up the fantastic work!
Kind regards,
P.S. Can’t wait to hear from the NWBO’s ‘Temporary Halt’. The suspense is killing me! That day should be ‘interesting’
Larry I hope WINT because the next company in your list of companies that gets acquired. Good job on this one.