The Story Behind Cellular Dynamics’ Sale to Fujifilm

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reduce Fujifilm’s stake to 10 percent, limit its distribution rights to just Japan, and put CDI in charge of the Japanese joint venture. Fujifilm’s representatives said that deal wasn’t likely to fly with company management, and suggested the company might instead be interested in buying a 51 percent controlling stake in CDI.

Talks later shifted to Fujifilm acquiring all of CDI’s outstanding shares. During a Jan. 11 CDI board conference call, board members said Fujifilm’s offer to purchase the shares at a range of $13 to $14.50 per share was “unacceptably low,” and asked Palay about other prospective buyers. He reportedly named five possible suitors, “but indicated he did not believe any of these parties would be interested,” the SEC filing says.

Negotiations between CDI and Fujifilm heated up, and CDI decided not to pursue other bidders, in part because dealing with one suitor meant reaching an agreement more quickly, as well as avoiding additional sharing of intellectual property with outsiders and potential disruptions of existing partnerships. Plus, CDI leaders believed “other parties were unlikely to be interested in acquiring the company for the price”— $15.50 per share at the time—“and on the timeline being discussed with” Fujifilm, the filing says.

The two sides worked out the kinks from January through March, and ultimately both companies’ boards unanimously approved Fujifilm’s purchase of all CDI stock for $307 million in cash, or $16.50 per share. That’s more than double CDI’s closing stock price on March 27, the last trading day before the boards approved the deal.

At least one shareholder disagrees that Fujifilm’s offer was fair and attractive. Michael Kahl of Oregon, WI, filed a class-action lawsuit last week challenging the sale in part because he feels it unfairly benefits the company’s board members and fleeces outside investors like him.

If the sale goes through, it raises a number of interesting and important questions:

Will this deal help Fujifilm, which has been making a push into regenerative medicine through acquisitions and in-house research, become a big player in this emerging industry?

Will CDI and Fujifilm help fulfill the promise of regenerative medicine by delivering cell-based therapies to market, either on their own or in partnership with pharma companies?

Under different financial circumstances, would CDI have continued building the business solo? And all things being equal, would Fujifilm have been its first choice for a buyer?

Time will answer the first two questions. We can only guess at the latter two.

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