Sweden's SOBI offers $1.7 billion to buy CTI BioPharma

By Louise Rasmussen

COPENHAGEN (Reuters) - Drugmaker Swedish Orphan Biovitrum (SOBI) said on Wednesday it had agreed to make a $1.7 billion cash offer for CTI BioPharma, a U.S. biopharmaceutical company focused on blood related cancers and rare diseases.

SOBI said it would make a tender offer for $9.10 per CTI share, a premium of 89% over Tuesday's closing price of $4.82, to be partly funded via a share issue, sending CTI's stock sharply higher in early U.S. trade.

The acquisition is aimed at expanding SOBI's rare haematology franchise, the company's CEO Guido Oelkers said in an interview.

"We want to be a global leader in rare disease," he said.

Shares in SOBI fell 14% by 1024 GMT, with RBC saying the share issue may initially be perceived negatively.

"Assuming half of the $1.7 billion purchase price equates to a $850 million rights issue, this would equate to 11% of the current equity base," the broker said in a note.

But the CEO defended the acquisition plan and said it was good for SOBI.

"We anticipated this reaction, but this cannot stop us from doing what is right for the company," Oelkers said.

"We think this is ultimately good for shareholders," he said, describing the tie-up as a perfect marriage.

CTI's VONJO, which treats rare haematological platelet disorders, will add a differentiated therapy to SOBI's existing portfolio, the Swedish group said.

The planned transaction, which was unanimously recommended by CTI's board, is fully funded through debt financing, up to half of which is expected to be refinanced through a rights issue.

The company said it expects the acquisition to accelerate its revenue growth and boost margins.

Investor AB, SOBI's top shareholder, supports the acquisition of CTI, and is subscribing to about 34.7% of the rights issue, SOBI said.

The transaction is expected to close in the third quarter of this year, the Swedish company added.

(Reporting by Louise Breusch Rasmussen; Editing by Terje Solsvik, Muralikumar Anantharaman, Sonali Paul and Louise Heavens)