Biotechnology

Time nudges Pfizer and Astra a bit further apart

27 Aug 2014

The U.S. pharma group is now allowed to renew its overtures to its UK peer. AstraZeneca has performed OK since May. That will support Astra’s recent view that any bid should be worth at least $123 bln. But Pfizer now has other options for tax-driven M&A.

Roche’s $8 bln bet outsmarts ice-bucket challenge

25 Aug 2014

Dumping cold water on heads, the social-media phenomenon now boosting ALS research, is a great way to raise charitable cash. But the drug made by Roche’s target, InterMune, treats a disease with more sufferers. The market may be the more efficient way to direct funds.

IPO exuberance ensnares Deutsche, Wells Fargo

13 Aug 2014

The two banks nixed a biotech deal six days after it started trading. Their reasoning looks defensible – an insider reneged on buying a big chunk of shares. But the Wall Street firms’ willingness to sell the stock in the first place smacks of a return of top-of-the-market laxity.

U.S. corporate émigrés may one day long for home

4 Aug 2014

High-flyers at firms like Goldman Sachs sometimes think they can do better striking out alone – only to fail for lack of the business card they’d undervalued. So it may prove with U.S. companies that invert, merging with foreign firms to gain domicile overseas and save on taxes.

Inversions start to spin out of control

30 Jul 2014

A quest for tax savings has made digestible overseas targets attractive to U.S. buyers. Hospira’s potential $5 bln deal for a Danone unit highlights a fresh supply, for so-called “spinversions.” The odd combination also reflects the perverse incentives distorting corporate decisions.

Reckitt pharma spinoff looks like a cold turkey

28 Jul 2014

The UK group is kicking its Suboxone habit. It plans to demerge its prescription drugs unit whose lead product is a heroin substitute. Reckitt is open to a trade sale and that might be more remunerative, but revenue and profit declines mean valuations could be thin either way.  

Allergan bosses put money where their mouths are

23 Jul 2014

The drugmaker says it’s worth more on its own than the $52 bln Valeant is offering. That’s straight from the empty-promise, takeover-defense playbook. Allergan, however, is linking stock and option grants to lofty profit goals. It’s a bolder gambit that should become an M&A norm.

GSK trapped in Big Pharma’s strategic bind

23 Jul 2014

The UK drugmaker no longer thinks it can grow earnings in 2014. Sales are being hit by price pressure and generic competition. Debt limits GSK’s ability to buy its way out of trouble; Chinese probes look like a poison pill to a tax-inverting merger. The stock is cheap for a reason.

AbbVie may find more than just tax charms in Shire

18 Jul 2014

The U.S. pharmaceutical group’s fifth offer, at $55 bln, finally persuaded its UK rival to sell. A 53 pct premium is a hefty price to pay given the modest synergies and potentially ephemeral tax arbitrage savings. Shire’s rare-disease drugs, however, should have lasting benefits.

Medical upstart may help investors smell blood

17 Jul 2014

Theranos is applying Apple-meets-Tesla ambition to lab testing and phlebotomy. Though ordinary punters can’t buy into the Silicon Valley firm, already valued at $9 bln, believers in founder Elizabeth Holmes could short LabCorp or Quest. They’re also worth $9 bln each – for now.

Mylan sets itself for M&A repeat prescription

14 Jul 2014

The U.S. pharma company will pay $5.3 bln for generic drug assets owned by Abbott. The transaction between the two American companies will see Mylan acquiring a tax home in Europe. The buyer is also likely to do further deals – and look for more tax arbitrage. 

Shire shows power of tax inversion levers

14 Jul 2014

The UK pharma group says a $54 bln proposal from U.S. suitor AbbVie is potentially acceptable. The 50 pct premium reflects the value of tax synergies and the recommendation needed to achieve them. AbbVie will doubtless prevail if its share price holds, and there is no counterbid.

Allergan may give investors yet another option

10 Jul 2014

The drugmaker’s conservative fiscal ways left it vulnerable to Valeant’s hostile $51 bln bid. Additional cost-cutting and buybacks is a persuasive standalone response. Behind door number three could be a bold acquisition. Allergan shareholders are likely to be spoiled for choice.

UK takeover rules are fiddly but fit for purpose

9 Jul 2014

AbbVie, the U.S. pharma group, has retracted comments made about shareholder support for its $51 bln bid for London-listed Shire. Britain’s M&A framework is tripping up overseas predators. But the system works: it avoids legal tangles and ensures investors are treated fairly.

Shire can get more from AbbVie

8 Jul 2014

The London-listed drugmaker is pondering a fresh, $51 bln unsolicited bid from its U.S. rival. AbbVie touts shareholder support and is offering a hefty 45 pct premium. Shire’s board can probably extract one more increase in return for a recommendation.

Roche gifts biotech founder a double-dip fillip

2 Jul 2014

It’s snapping up Seragon for at least $725 mln. CEO Richard Heyman only set up the one-drug biotech firm a year ago, spinning it out before getting $650 mln from J&J for its parent company. With pharma giants desperate for new product, such deal-making is likely to be replicated.

Tax-arbitrage M&A requires a deep discount

1 Jul 2014

U.S. companies seeking to relocate by mergers were a big part of the $1.8 trln first-half deal boom. The benefits of such ill-conceived combinations will be fleeting. Tax reform is already being discussed. And the more inversions there are, the more likely the law is to change.

AbbVie hints it can afford to pay more for Shire

25 Jun 2014

The U.S. drugmaker is marketing its $46 bln bid proposal direct to Shire investors. As bear hugs go, it’s soft. A price increase would have put more pressure on the target. AbbVie’s talk of material earnings gains in a deal implies a raise is possible – and may scare interlopers.

Vertex offers niche prescription for pharma profit

24 Jun 2014

Proof that the biotech firm’s cystic fibrosis drug can help thousands of patients added more than $6 bln to its valuation. There’s no real alternative treatment, so insurers will pay. It’s another reminder that pharma’s future is in high-priced medicines for uncommon diseases.

Shire’s case for resisting AbbVie is good enough

23 Jun 2014

The UK pharma group’s target of $10 bln of sales in 2020 is aggressive but not outlandish. Meanwhile, near-term revenue is growing. That leaves AbbVie’s recent $46 bln bid proposal looking insufficiently tempting. Factor in scarcity value and Shire can afford to sit tight.