Biogen (BIIB: 276.06; Max Buy Price 300.84; Min Sell Price 384.62) will spin off its hemophilia division to Biogen shareholders on February 1, 2017. For each share of Biogen, stockholders will receive two shares of the new company, called Bioverativ (BIVV). George Scangos, chief executive officer of Biogen, will head the new company. A special cash dividend will be paid to BIVV stockholders on February 2 (amount to be determined).
Bioverativ will inherit two very successful hemophilia drugs which generated $847 million in sales in 2016, an increase of 53% from 2015—the first full year after the two drugs were launched in 2014. BIVV will start with $325 million cash and minimal debt. Cash will be needed to start up new research, because Bioverativ has no new drugs in its pipeline.
I recommend holding Bioverativ (BIVV) when it is spun off from Biogen on February 1. I continue to rate Biogen as a Buy. BIVV currently is trading pre-spinoff at 43.99, so I expect Biogen’s stock price to be reduced by double the amount (two shares of BIVV @ 44), to about 188 per share on February 1. If you own Biogen, on February 1, you will own one share of BIIB plus two shares of BIVV. Your share value will be 188 for each share of BIIB plus 44 for each of your two shares of BIVV. Total value will be approximately 188 plus 44 times 2 = 276.