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MSMB Capital Derails Acquisition of $ALTH by $AMAG

Martin Shkreli, MSMB Capital has succeeded in derailing the acquisition of Allos Therapeutics Inc. (ALTH) by AMAG Pharmaceuticals Inc. (AMAG). According to Bloomberg, AMAG announced today that “it didn’t get enough investor votes to support its $184.8 million acquisition of ALTH.”

Phill Gross

Martin Shkreli Led Shareholder Opposition

Martin Shkreli was so strongly against the deal that he took a 5.8% ownership interest in AMAG to try to prevent it. He went so far as to actively push against it through his position on the board. At one point, Shkreli even pushed to have several members of AMAg’s board dismissed and replaced with people from MSMB. While Shkreli was the most adamant that the deal between ALTH and AMAG not go through, he was far from alone in his opposition. Adage Capital Management and Palo Alto Investors, which own 17.5% and 15% of AMAG respectively, have both publicly said they were opposed to any merger or acquisition between AMAG and ALTH, explaining that they do not see the rationale behind the deal, strategically nor financially. Martin Shkreli’s push against the merger left a sour taste in the mouth of at least one board member, who was quoted by TheStreet as saying, “Voting no on the Allos deal is a referendum against Amag’s management team.”

AMAG and ALTH’s Fate Going Forward

The failed merger also affected the market. Once the collapse of the deal was announced, ALTH fell to a historic low. When AMAG first began talks with ALTH, its share price was around $2.44. ALTH closed yesterday at just $1.75 a share. Bloomberg reports, “Allos dropped 4.8 percent to $1.39 at 10:54 a.m., after earlier declining to $1.28, the shares’ lowest value since their initial public offering in March 2000. Through yesterday, they were down 68 percent this year.AMAG rose 1 cent to $13.65. The shares had fallen 25 percent this year before today.” According to Bloomberg, Shkreli remains motivated – “MSMB, which owned 5.9 percent of AMAG as of Oct. 7, had made an unsolicited bid to buy the company in August for $18 a share, or $378 million. Martin Shkreli, MSMB’s chief investment officer, said today his plans still stand.”