Biotechnology

Roche rolls craps on Genentech

23 Apr 2009

Drug companies routinely bet billions on uncertain odds. Roche gambled by spending $47bn on Genentech just before the results of an important clinical trial were announced. It lost. Roche overpaid by billions, but it was a gamble worth taking.

Merck liberates overseas cash in Schering deal

10 Mar 2009

The US drug group needs to tap its giant cash pile to buy rival ScheringPlough. But the money is trapped overseas, and simply repatriating it would trigger a tax bill. Merck has found a way around that, using a relic of an old Schering acquisition. It's a clever twist.

Merck banks on huge savings to outweigh deal risks

9 Mar 2009

The US company has never believed in big pharma M&A. So why is it bidding $44bn for rival ScheringPlough which might lose the right to sell an important drug because of the deal? Well, the two should fit nicely. But the big motivation is $25bnworth of potential cost cuts.

Roche tries higher offer to put Genentech away

6 Mar 2009

After going hostile, the Swiss group has reversed tack and is making soothing sounds. By raising its bid to $93 a share, Roche has a chance to seal its deal before Genentech unveils drug data in April and possibly raises the purchase price.

Pfizer’s $68bn Wyeth deal shows irony of Fed bailout

26 Jan 2009

The takeover is being greased by $22.5bn in loans from a bank consortium that looks like a Who s Who of Tarp recipients. Using taxpayer money to fund Pfizer s corporate bloodletting will raise uncomfortable questions in Washington.

Recessionary M&A stages its comeback

23 Jan 2009

A Pfizer deal with Wyeth would illustrate the merits of merging when economies are slowing or shrinking. A deal done mostly in stock, slicing out padding in costs and R&D, would benefit both sets of shareholders. This looks like a taste of deals to come.

Debt cliff puts distressed M&A on the table

12 Jan 2009

Advanced Medical Optics was aggressively trying to purchase rivals in 2007. Now, its board has agreed to sell to Abbott Labs at a fire sale price. With more companies facing the prospect of hitting walls of unrefinanceable debt, expect more semiforced sales.

Big pharma could replace R&D with M&A

7 Jan 2009

The ten biggest drug makers spent more than $50bn on research in 2008. For the same amount, they could own the entire US biotech industry save the five biggest companies. It might be a better use of their cash.

M&A excesses produce impairment reflux

7 Jan 2009

After massive share price falls, auditors are pushing companies to take big impairment charges on assets bought in better times. Time Warner and Intel are early sufferers, making already crummy results look worse. It s not a cash charge, but a sad reminder of past overoptimism.

Cigar butts: bargains or toxic waste?

24 Nov 2008

Numerous tech and biotech companies are valued at less than the net cash on their books. Many of these firms are just trash, but activists and value investors might still be able to get a last puff of value from some of them.

Lilly’s $6.1bn offer for Imclone may spark bidding war

6 Oct 2008

M&A bankers may be in hibernation, but biotechs with saleable drugs are keeping big pharma up nights. Eli Lilly has offered a full price for Imclone, an asset with some strings attached. Rival suitor and natural partner BristolMyers Squibb isn t out of the running.

Sanofi gets rid of boss late in the day

10 Sep 2008

The French pharmaceuticals company s largest shareholders, Total and L Oreal, have taken action in response to the long share price slide that followed the botched merger with Aventis. CEO Gerard Le Fur is out. But the chairman, JeanFrancois Dehecq, should go as well.

US needs to catch up on equity swap disclosure

10 Sep 2008

The role of nonvoting economic stakes in takeover battles has been murky. US regulators should demand more disclosure, as some of their international colleagues have done. Derivatives' pivotal role in the takeover battle of Longs Drug shows why.

Bristol-Myers doubles down with $4.5bn Imclone bid

31 Jul 2008

The US drugs group s purchase of 17% of the biotech in 2001 for $2bn turned out to be a financial dud. Now, it has made an unsolicited offer to buy the rest for $4.5bn. Even at the lower price, it's still a risky bet but Imclone s rich pipeline increases the odds of success.

Roche replays Genentech history, with a twist

25 Jul 2008

The Swiss drugs group first bought out Genentech s minority shareholders back in 1999. Swiftly taking the US biotechnology company public again was smart and profitable. Now, Roche wants it all to itself again. The biotech s far larger size explains the change of heart.

Genentech board savvy is key to Roche deal

22 Jul 2008

Roche wants to buy out the minority shareholders in the San Franciscobased biotech company for $89 a share. Roche can, ultimately, force a deal. But there are elements of control at stake, and the independent directors should be able to talk Roche into a higher price.

Roche trades balance sheet for biotech

21 Jul 2008

The proposed $44bn buyout of Genentech s minorities is a bold move for the Swiss drug maker. It s willing to move from net cash to significant leverage, and to abandon the longstanding independence of the US biotech leader. But the 9% premium on offer could prove inadequate.

Pfizer – Ranbaxy Lipitor deal deserves scrutiny

19 Jun 2008

The drug giant inked an agreement that postpones generic competition to its $12bn cholesterol drug from India s Ranbaxy. The quid pro quo: Ranbaxy can sell another of Pfizer s drugs. This may not be as obviously anticompetitive as a cash payment, but it s close.

Pfizer’s woes won’t be solved with trip to India

13 Jun 2008

The drug company may start a bidding war for Indian firm Ranbaxy, according to reports. The fact this loopy idea is being taken seriously shows investors are starting to panic over Pfizer s looming clash with makers of generic drugs.

Indian buy is tonic for Daiichi’s Japan business

11 Jun 2008

Daiichi Sankyo's purchase of control in Ranbaxy is a great deal for both. Ranbaxy's founding family gets a hefty premium for an overleveraged company, while Daiichi gets Ranbaxy's cheap, high quality manufacturing to help it attack the opening Japanese generic drug market.