Incyte Announces Preliminary Results of Tender Offer

Rhea-AI Summary

Incyte (Nasdaq: INCY) announced the preliminary results of its $1.672 billion modified 'Dutch auction' tender offer for common stock, which ended on June 10, 2024. Approximately 29.8 million shares were tendered at or below $60 per share, with a preliminary proration factor of 93.4%. Incyte expects to buy around 27.9 million shares, representing 12.4% of its total outstanding shares. Additionally, a separate agreement with Baker Entities will see Incyte repurchasing 33.3 million shares at $60 per share, totaling about $2.0 billion. This accounts for approximately 14.8% of the company's total shares. Final figures will be confirmed post the guaranteed delivery period.

Positive

• Incyte is set to repurchase around 33.3 million shares, reducing outstanding shares by approximately 14.8%.
• The tender offer and stock purchase agreement total $2.0 billion, demonstrating strong liquidity.
• The share repurchase price of $60 per share may support the stock price.

Negative

• The tender offer will cost Incyte $1.672 billion plus additional fees and expenses.
• Approximately 29.8 million shares were tendered, but only 27.9 million will be purchased, leading to a proration factor of 93.4%.
• The actual financial impact remains uncertain until final confirmation post the guaranteed delivery period.

Insights

Financial Analyst

Tender Offer Analysis: The tender offer price of $60.00 per share signifies a significant premium over Incyte's recent trading price, which could suggest management believes the stock is undervalued. By repurchasing 12.4% of outstanding shares, Incyte is returning a substantial amount of value to shareholders. This often signals confidence in the company's future prospects and can lead to a positive short-term impact on the share price due to reduced supply.

However, the use of cash on hand for this repurchase means the company is depleting its liquidity. Investors should monitor whether this depletion could impact Incyte's ability to fund future projects or acquisitions. The involvement of the Baker Entities, who are not participating in the tender but will maintain their ownership percentage, indicates a strategic alignment with long-term shareholders.

It's important to consider the repurchase's implications on key financial metrics. With fewer shares outstanding, earnings per share (EPS) will likely improve, which can be seen favorably in future earnings reports. However, the significant outlay, totaling over $2.0 billion, could also draw scrutiny regarding opportunity costs and alternative uses of capital.

Short-Term Impact: Likely positive due to immediate reduction in share supply.

Long-Term Impact: Positive if the reduced share count leads to higher EPS and sustained confidence in company strategy, but liquidity concerns should be monitored.

Market Research Analyst

Market Sentiment: The Dutch auction method for this tender offer allows shareholders to tender their shares at a price within a specified range, reflecting a willingness to part with shares potentially at a premium. This method is often used to gauge shareholder sentiment. The high proration rate (93.4%) indicates a strong participation rate, suggesting many shareholders find the current price attractive enough to sell.

The involvement of Goldman Sachs & Co. as the dealer manager and D.F. King & Co. as information agent lends credibility and professionalism to the process, likely instilling confidence among investors. The strategic decision by the Baker Entities to maintain their ownership percentage reflects a long-term bullish outlook on Incyte's potential growth.

Overall, this tender offer might be seen as a positive signal by the market, as it suggests that the company believes its shares are undervalued and is willing to invest a significant amount of capital to buy back shares. It's a way for the management to show confidence in the company's future performance.

WILMINGTON, Del.--(BUSINESS WIRE)-- Incyte Corporation (Nasdaq: INCY) (“Incyte” or the “Company”) announced today the preliminary results of its modified “Dutch auction” tender offer to purchase up to $1.672 billion in value of shares of its common stock, which expired at 12:00 midnight, at the end of the day, New York City time, on June 10, 2024.

Based on the preliminary count by Computershare Trust Company, N.A., the depositary for the tender offer, a total of approximately 29.8 million shares of Incyte’s common stock were properly tendered and not properly withdrawn at or below the purchase price of $60.00 per share, including approximately 14.8 million shares that were tendered through notice of guaranteed delivery. Incyte has been informed by the depositary that the preliminary proration factor for the shares to be purchased by Incyte pursuant to the tender offer is approximately 93.4 percent.

In accordance with the terms and conditions of the tender offer and based on the preliminary count by the depositary, the Company expects to purchase approximately 27.9 million shares of its common stock through the tender offer at a purchase price of $60.00 per share, for a total cost of approximately $1.672 billion, excluding fees and expenses relating to the tender offer. These shares represent approximately 12.4 percent of the Company’s total outstanding shares of common stock as of June 7, 2024.

As previously announced, on May 12, 2024, Incyte entered into a separate stock purchase agreement with Julian C. Baker (a member of Incyte’s Board of Directors), Felix J. Baker, and entities affiliated with Julian C. and Felix J. Baker, including funds advised by Baker Bros. Advisors LP (collectively, the “Baker Entities”), under which the Baker Entities agreed not to tender or sell any shares in the tender offer and instead agreed to sell to the Company, following completion of the tender offer, a pro rata number of shares at the same price per share as will be paid by the Company in the tender offer, such that the Baker Entities’ aggregate percentage ownership in the Company will be substantially the same as prior to the tender offer. As such, the Company expects to repurchase a total of approximately 33.3 million shares of its common stock through the tender offer and the stock purchase agreement at a price of $60.00 per share, for a total cost of approximately $2.0 billion, excluding fees and expenses. These shares represent approximately 14.8 percent of the Company’s total outstanding shares of common stock as of June 7, 2024.

The number of shares expected to be purchased in the tender offer and under the stock purchase agreement and the purchase price per share are preliminary and subject to change. The preliminary information contained in this press release is subject to confirmation by the depositary and is based on the assumption that all shares tendered through notice of guaranteed delivery will be delivered within the required one business day period. The final number of shares to be purchased in the tender offer and the final purchase price per share will be announced following the expiration of the guaranteed delivery period and the completion by the depositary of the confirmation process. Payment for the shares accepted for purchase pursuant to the tender offer, and the return of all other shares tendered and not purchased, will occur promptly following the completion of the confirmation process. The Company expects to fund the purchase of shares in the tender offer and pursuant to the stock purchase agreement with the Baker Entities, together with all related fees and expenses, with cash on hand.

The dealer manager for the tender offer is Goldman Sachs & Co. LLC. D.F. King & Co., Inc. is serving as information agent for the tender offer. Stockholders who have questions or would like additional information about the tender offer may contact D.F. King & Co., Inc. toll-free at (866) 864-4943.

About Incyte

A global biopharmaceutical company on a mission to Solve On., Incyte follows the science to find solutions for patients with unmet medical needs. Through the discovery, development, and commercialization of proprietary therapeutics, Incyte has established a portfolio of first-in-class medicines for patients and a strong pipeline of products in Oncology and Inflammation & Autoimmunity. Headquartered in Wilmington, Delaware, Incyte has operations in North America, Europe, and Asia.

Forward-Looking Statements

Except for the historical information set forth herein, the matters set forth in this release contain predictions, estimates and other forward-looking statements, including statements regarding the amount of shares to be purchased (including the amount of shares tendered through notice of guaranteed delivery), the purchase price per share, the total cost of the shares expected to be purchased in the tender offer and under the stock purchase agreement and expectations regarding the consummation of the tender offer and the stock purchase from the Baker Entities.

These forward-looking statements are based on Incyte’s current expectations and subject to risks and uncertainties that may cause actual results to differ materially, including the statements above regarding the determination of the final number of shares to be purchased in the tender offer and the final purchase price per share, developments or changes in economic or market conditions; developments or changes in the securities markets, developments or changes in the Company’s business, financial condition or cash flows, and other risks detailed in Incyte’s reports filed with the Securities and Exchange Commission, including its quarterly report on Form 10-Q for the quarter ended March 31, 2024. Incyte disclaims any intent or obligation to update these forward- looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240611735162/en/

Media

media@incyte.com

Investors

ir@incyte.com

Source: Incyte Corporation

FAQ

What are the preliminary results of Incyte's tender offer?

Incyte announced preliminary results showing 29.8 million shares tendered, with an expected purchase of 27.9 million shares at $60 per share.

How many shares will Incyte repurchase under the tender offer?

Incyte expects to repurchase approximately 27.9 million shares at $60 per share, representing about 12.4% of its total outstanding shares.

What is the total cost of Incyte's share repurchase?

The total cost of the repurchase is expected to be approximately $2.0 billion, excluding fees and expenses.

What is the proration factor for Incyte's tender offer?

The preliminary proration factor for the shares to be purchased by Incyte is approximately 93.4%.

When did Incyte's tender offer expire?

The tender offer expired at 12:00 midnight, New York City time, on June 10, 2024.

How will Incyte fund the share repurchase?

Incyte expects to fund the repurchase using its cash on hand.