MSMB claims Amag’s proposed $686 million deal with Allos will benefit neither company nor shareholders.

Amag Pharmaceuticals’ long-term investor, MSMB Capital Management, has made an unsolicited offer to buy the firm outright for an aggregate of $378 million, to stop Amag proceeding with a recently announced merger with Allos Therapeutics. MSBM believes Amag’s proposed $686 million merger with Allos, which would give the latter a 39% ownership in the combined entity, isn’t in the best interests of Amag or its shareholders. “The management’s current strategy does not protect the interests of Amag’s stockholders or ensure Amag’s long-term viability,” states Martin Shkreli, MSMB CEO.

In a letter to the Amag board, Shkreli said he was surprised and disappointed at the firm’s proposed merger deal with Allos. “We do not understand the company’s motivation in entering into a business combination transaction that does not provide stockholders with a premium or a liquidity alternative,” he states. In contrast, MSMB’s $18 per share takeover deal represents a 25% premium to Amag’s price at close yesterday, and provides “liquidity and superior economics to the company’s shareholders. The company’s common stock has not reacted positively to the proposed transaction with Allos and the offer from MSMB provides the company’s stockholders a viable alternatively to this poorly viewed transaction.”

MSMB says it may even be willing to up its offer subject to certain conditions and due diligence. The investment firm in addition warned that if the Amag board won’t work with MSMB to finalize a deal, it will take the offer directly to shareholders. “It is imperative that the company be sold now, the transaction with Allos terminated, and further erosion of stockholder value be prevented,” Shkreli continues in his letter. “Our offer is compelling and provides the company’s stockholders an immediate and certain path to a premium, all-cash transaction that will eliminate the risk associated with the Allos transaction as well as the risk of future value destruction.”

Amag is developing iron therapeutics based on its core iron oxide particle. Lead commercial product, Feraheme® (ferumoxytol injection), is marketed in the U.S. for the treatment of iron deficiency anemia (IDA) in adults with chronic kidney disease. The product is also under regulatory review in the EU, Canada, and Switzerland. Feraheme is separately being evaluated through a global registrational program for a broad IDA indication.

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