Biotechnology

Delay in Pfizer split is material adverse event

24 Nov 2015

The $160 bln acquisition of Allergan will cut taxes and add solid assets, but it’s also causing Pfizer to defer until 2018 a decision on splitting up. Even though the company’s disposals have added greater value than acquisitions, CEO Ian Read seems more eager to bulk up.

Pfizer-Allergan gets no support from scaredy arbs

24 Nov 2015

The drugmakers’ shares are trading far below the prices implied by Pfizer’s all-stock offer - as if the merger were going to create no value. Arbitrageurs who used to exploit such gaps have little taste for massive deals – especially ones that have politicians on the warpath.

Pfizer-Allergan helps both small and big advisers

23 Nov 2015

As many boutique M&A firms as bulge-bracket players are working on the $160 bln pharma mega-merger. That’s a more even mix than the average this year. But the tax-driven deal’s roster includes Goldman, Morgan Stanley and JPMorgan, extending their league-table lead over rivals.

Pfizer barely washes face in $160 bln Allergan deal

23 Nov 2015

The biggest inversion ever will bring hefty tax and cost savings worth slightly more than the $30 bln premium on offer. Snag is, the structure will upset U.S. authorities. And slamming two drug giants together often creates dis-synergies in the labs.

Pfizer’s $150 bln plan is high-risk, low-benefit

19 Nov 2015

Buying Allergan would give the drug giant a low-tax domicile in Ireland and one good drug, Botox. At the reported price, Allergan would accrue nearly all of the obvious upside. Pfizer would be left with a possible integration hangover – and tax savings that might disappear.

Chancellor: The illusion of debt-fuelled earnings

18 Nov 2015

Low borrowing costs enabled acquisitive drugmaker Valeant to ratchet up EPS with leverage. Earlier episodes of financial engineering - like Japan’s zaitech and the 1960s conglomerate boom - came unstuck after rates rose and stocks fell. It won’t be any different this time.

Heads won’t roll at Mylan despite blunders

13 Nov 2015

Rather than take a $40 bln-plus offer from Teva, the drug firm pursued Perrigo, whose owners rejected the bid on Friday. The vote was partly against Mylan’s poor governance – which also makes it unusually hard for its own shareholders to turf out inept executives and directors.

Biotech firm’s stock buyback emits bad bouquet

12 Nov 2015

NantKwest wants to snap up a large chunk of stock at a big discount to its July IPO. Yet the biotech controlled by Patrick Soon-Shiong needs the money as it’s likely to burn cash for years. A buyback would, though, prop up the price ahead of an expiring lockup for executives.

Valeant CEO gets called on $100 mln excess

6 Nov 2015

Paying bosses in equity nudges them to serve shareholder interests. The pharma giant went to extremes, allowing chief Michael Pearson to borrow heavily against his shares. The tumbling stock forced him to repay the debt - an example of how skewed incentives have rocked Valeant.

Bill Ackman pushes limits of activism at Valeant

5 Nov 2015

The hedge fund boss hinted the drugmaker’s CEO may need to go and was invited into the boardroom mid-crisis, according to a newspaper report. Ackman also seems to have usurped Valeant’s defense. The $55 bln of quickly lost market value suggests his involvement isn’t helping much.

AstraZeneca goes two steps forward, one step back

5 Nov 2015

The UK drugmaker’s third quarter beat expectations. It raised forecast sales and earnings. But Astra was helped by old medicines declining less quickly than expected, and some one-off gains. The mixed performance shows why its discount to peers is deserved.

Shire pays up for easier prey than Baxalta

2 Nov 2015

The UK pharma group is offering $6 bln for rare-disease drugmaker Dyax while biding its time for an eventual swoop on Baxalta. The deal relies on bold assumptions and could take years to pay off. Shire is good at M&A, but a weak share price shows market support can’t be assumed.

Merger Monday has a scary Halloween afterglow

2 Nov 2015

At least six corporate buyers unmasked acquisitions of $1 bln or more to sustain the freakish pace of M&A. Some of them, including Visa’s, are tricky, while others like Shire’s treat sellers to rich prices. The zombie-like deal march is causing investors to take fright.

Ackman’s Valeant defense nervy but unpersuasive

30 Oct 2015

The hedge fund founder says the drug firm is a victim of bad PR, naive investors and jealous rivals. He even likened his stake to Warren Buffett’s savvy investment in lenders cheated by a 1960s salad-oil scandal. The reality is Valeant is flawed in ways a “pep talk” won’t fix.

Pfizer may overdose on quick and complex deals

29 Oct 2015

The drug giant is in talks to buy Allergan and seems likely to split the merged firm. It is moving briskly to take advantage of low share prices and tax benefits that could vanish with a new Congress. Speed can prompt missteps, though, as the pharma giant knows only too well.

Pfizer may pay dearly for Allergan tax-lite charms

29 Oct 2015

The U.S. drugs group is eyeing a $330 bln tie-up with its Ireland-based rival, reports suggest. Allergan, with an enviably low tax rate, can hold out for a good price. But if Pfizer stumps up for a premium of more than 25 percent, it will risk paying away the benefits of a deal. 

No simple cures for Gilead and Apple valuations

28 Oct 2015

Like the iPhone maker, the biotech is the best in its industry and churns out hefty profit. Yet its stock trades at a big discount to the market. Investor impatience for astonishing new products - and fears that neither company will find them - borders on the irrational.

Investors coax Walgreens Boots to swallow Rite Aid

27 Oct 2015

Scooping up the No. 3 U.S. drug chain strengthens $98 bln Walgreens as it battles domestic leader CVS. Antitrust is an obvious question given the rough ride Staples has faced with Office Depot, but the hurdles look manageable. Shareholders are certainly not worried.

Valeant’s clarification efforts further tangle web

26 Oct 2015

The acquisitive pharmaceutical company’s attempt to explain ties to drug distributors failed to clear things up. Analysts didn’t ask – and a 90-page presentation and call with investors didn’t answer – why it obscured the dealings. The messy details also confirm some fears.

Valeant sets tone for post-M&A accounting scrutiny

22 Oct 2015

The drugmaker’s stock ended Wednesday down 19 pct after a short-seller and others questioned its bookkeeping. The $40 bln serial acquirer’s history may make it an obvious target, but as growth and mergers slow a renewed investor focus on companies’ figures is a logical shift.