Cephalon crosses Sirtex's takeover 'line in the sand'

US-based pharma Cephalon has pushed its share interest in drug delivery company Sirtex over the 85 per cent level, and so looks set to complete its intended takeover.

Described by Sirtex founder and CEO Bruce Gray as a "line in the sand", the critical 80 per cent limit is now in Cephalon's pocket, paving the way to an automatic takeover at 90 per cent.

"Cephalon has played a very tough game, but they knew what they were doing," commented Alison Coutts, director of Sydney investment bank EG Capital.

Market observers now expect the US company to take a slowly-slowly approach to build up its holding to 90 per cent, and then use that to control the company.

However, some sources indicate a degree of disquiet at the $AUD4.85 price offered, which Coutts said was a lot less than the $6 that could have been expected.

"Cephalon were playing coy until they saw what [institutional investor] Hunter Hall did. The bid was not really a true refection of the share value, and is a big disappointment for those at bought previously at $5.50," she said.

However, the move is good news for both cancer victims and Australian biotechs, who could both benefit from the takeover.

Coutts asserted that Sirtex's innovative delivery platform would undoubtedly see more rapid uptake now than if the WA company had gone it alone.

"If you look at it from the perspective of cancer victims it is a good thing, because the technology will undoubtedly see much quicker globalisation through the US company," she said.

The other upside which could accrue from the deal is the signal flag to other US companies that Australian biotechs can make good investment M&A targets.

"This says to the market that Australia can attract big US companies. This deal may well seed other, similar deals -- which is good for the economy and good for companies struggling to get their product onto the market," said Coutts.