Biotechnology

Sanofi creates toxic combination for investors

28 Oct 2014

The French drugmaker’s shares plunged after it said sales growth in diabetes drugs would stall next year. This is a vital business and the surprise slowdown is hard to decode. A reported boardroom rift just adds uncertainty. Sanofi needs to rebuild shareholder confidence.

GSK’s deal-making days may just be starting

22 Oct 2014

The struggling pharma group is mulling an IPO of its HIV unit, which would go straight into the FTSE-100. It’s also holding next year’s dividend flat. The extra financial flexibility is welcome. But there’s also scope for a more radical strategy to realise value from disposals.

Amgen boss makes a prime breakup target

21 Oct 2014

Former Morgan Stanley banker Robert Bradway runs the $109 bln biotech being eyed by activist Dan Loeb. Splitting into a cash cow and a growth arm comes up often in the industry but rarely happens. In Amgen’s case, its drug focus and the CEO’s background give the idea a chance.

Two useful AbbVie inversions to pay for failed one

20 Oct 2014

Turning tail on the $54 bln Shire deal exposes the U.S. drugmaker’s folly chasing a lower tax bill. Investors facing a $1.6 bln break fee should push for other AbbVie flips: boss Richard Gonzalez’s compensation and the company’s governance in the form of an independent chairman.

Rolls-Royce enters new era of uncertainty

17 Oct 2014

A profit warning has sent the UK engineer’s shares down 8 pct. Russian sanctions and the weak world economy are hurting. Cost cuts and new medium-term guidance show Rolls is trying to soften the blow. But investors may discount the company’s forecasting powers.

Megadeals like AbbVie/Shire invite arbitragedy

16 Oct 2014

Doubts over the $55 bln takeover have hurt Paulson, Elliott and other hedge funds. This caps a dismal half-decade for merger arbitrage. Bids have been scarce and spreads narrow. And the biggest, most investable deals often come with the worst political and regulatory pitfalls.

AbbVie U-turn shows Shire was mostly about tax

15 Oct 2014

The American group has cooled on a $55 bln bid for its UK-listed peer. The change of heart was prompted by U.S. opposition to “inversions.” That shows how much, despite AbbVie’s earlier protests, this deal was driven by tax. A recut takeover looks unlikely.

Bankers get painful and needed conflicts reminder

13 Oct 2014

A $76 mln penalty against RBC for working both sides of a deal is the latest blow to skewed loyalties. Even with recent slaps at Goldman and Barclays, it isn’t clear the message is reaching Wall Street. Delaware courts seem up to the task of delivering it as loudly as it takes.

Allergan takeover trials reach Phase III

8 Oct 2014

The $52 bln acquisition attempt began with Valeant’s controversial experiment involving activist Bill Ackman. The botox maker rejected that hypothesis, but a sweeter bid and rival Actavis may soon be added to the mix. Approval of some kind is now in the offing.

Health deal’s $12 bln focus on fit is promising

6 Oct 2014

It’s the busiest year on record for healthcare M&A, as companies seek complex tax-driven benefits from mergers. Medical equipment group Becton Dickinson’s purchase of CareFusion offers little beyond cost savings and complementary businesses. That’s a good recipe for success.

Ebola sets clock ticking on West African economy

1 Oct 2014

Growth may yet survive the deadly epidemic. The last four years’ 28 pct pace isn’t realistic, but controlling the outbreak soon should at least preserve investment. That won’t be easy, given the virus has now spread to the U.S. In saving lives and the economy, every day counts.

ValueAct’s Valeant return hints at value trap

25 Sep 2014

The departure of the activist fund led by Jeff Ubben from the drug company’s board in May set off a slide in its stock, the currency critical to its M&A-machine strategy. ValueAct is rejoining, and may buy more. Some good investments are harder to leave than they are to make.

Sam Waksal’s new biotech tests Wall Street amnesia

24 Sep 2014

The former ImClone boss who went to prison for an insider trading scandal that also ensnared Martha Stewart plans to take his latest venture public this year. He follows second-chancers like Donald Trump and LTCM founder John Meriwether. Investors can be astonishingly forgiving.

Tax clampdown could deter half-baked pharma M&A

23 Sep 2014

The U.S. attack on companies relocating to avoid taxes will calm pharma’s M&A binge. Deals like AbbVie’s purchase of Shire may survive on strategic logic. Pure tax-driven combinations, like Mylan/Abbott, look tricky. That lessens AstraZeneca’s vulnerability to a bid from Pfizer.

Merck’s mega-deal leaves pharma in need of a fix

22 Sep 2014

The German drugs and chemicals maker will buy U.S. life-science group Sigma-Aldrich for $17 bln. The deal defies expectations that Merck would bulk up in pharmaceuticals. It makes strategic sense, and isn’t too expensive. But the humdrum pharma unit is left in need of repair. 

GSK graft case raises risk for executives in China

19 Sep 2014

The drugmaker is paying a 297 mln stg fine for bribing non-government officials in China. That sets a floor for penalties in future probes. But the suspended sentences for five executives also send a warning that pain in such cases falls on individuals just as much as companies.

Bayer’s plastic float sows seeds for one more sale

18 Sep 2014

Investors added $5 bln to the German blue-chip’s market cap after it unveiled plans to float its capital-intensive MaterialScience unit. Once again, markets are rewarding sharper focus. A logical follow-up would be to quit agrochemicals, leaving a pure healthcare business.

Inversion sharks eat each other in feeding frenzy

17 Sep 2014

Acquisitive U.S. drugmaker Auxilium’s attempt to buy its way into a Canadian tax jurisdiction may be thwarted by M&A machine Endo International’s hostile $2.2 bln offer for Auxilium. When serial dealmakers start going after each other, it signals a dearth of suitable targets.

Valeant gets one last shot to woo Allergan owners

16 Sep 2014

The Botox maker locked in a December date putting most of the board to a vote that may set the stage for a $51 bln hostile takeover. Before then, the focus will be on Valeant’s M&A-free results. It’s the buyer’s best hope, assuming Allergan doesn’t find another deal first.

Merger Monday deal enthusiasm in rude health

15 Sep 2014

Cognizant may have good reasons for buying healthcare IT provider TriZetto for $2.7 bln. But promises of revenue synergies mixed with jargon should provoke investor skepticism, not an immediate 2 pct pop in the buyer’s shares. It’s a symptom of simmering M&A exuberance.