As the IPO window for biotech companies opens and closes unsteadily for short periods of time, an alternative liquidity event - consolidation - has become attractive to biotech companies.
The traditional rationales for mergers and acquisitions, such as gaining critical mass to attract investor interest and taking advantage of technology synergies accompanied by cost-cutting, have become more compelling to biotech company shareholders. A growing number of these deals involve the acquisition of a U.S. biotech company by a European acquirer (e.g., CeNes/Cambridge Neuroscience, GPC/Mitotix, Elan/Liposome). Why is this?
Currently the relative valuations of biotech companies at a comparable stage of development are higher in Europe. Investor demand exceeds the supply of investment opportunities on local European stock markets such as the Neur Markt in Germany, the Copenhagen Stock Exchange, and the Swiss Stock Exchange, pushing up the valuations of public and private European biotech
