Biotechnology

Bayer would risk choking on Monsanto

12 May 2016

The $94 bln German chemical giant may be mulling a bid for the U.S. seed maker. Monsanto, worth $39 bln, would need convincing. A deal pitched at a 30 pct premium is financially feasible, but Bayer would need to raise a lot of cash – and deal with clashing cultures.

From Allergan to Zoetis: new drug M&A perspectives

10 May 2016

The acquisitive maker of Botox is devoting capital to buybacks and paying down debt. Meanwhile, Bill Ackman is selling a big stake in the animal-health company he has been pushing as a takeover target. With luck, the two moves together signal a more subdued approach to deals.

Pfizer mulls actually having an M&A strategy

5 May 2016

The $205 bln drug giant’s last two huge acquisition attempts failed. Pfizer could yet try another merger to cut its tax rate, it could enter a potentially heated auction for $10 bln biotech Medivation, or it could split up. Dealmaking success depends on having clearer goals.

Abbott’s $25 bln buy inspires little investor hope

28 Apr 2016

It’s buying medical-device maker St. Jude at a $6.5 bln premium. Cost cuts cover less than half that, and earnings accretion doesn’t make it a good deal. Abbott’s value tumbled over $5 bln. Shareholders may recall that the target’s namesake is the patron saint of lost causes.

AbbVie grabs unicorn by its $10 bln horn

28 Apr 2016

The U.S. pharma giant is buying Stemcentrx, an eight-year-old cancer-drug developer backed by the blue-chip Founders Fund. Valued at $5 bln last fall, it was among Silicon Valley startups tarnished by recent markdowns. The sale suggests some hyped firms can still live the fantasy.

Sanofi bidding war looks expensive from the start

28 Apr 2016

The French pharma group’s $9.3 bln bid for cancer drugmaker Medivation is opportunistic and logical: the target’s shares have fallen on U.S. pricing fears, and Sanofi needs to diversify. But it’s not cheap, and other suitors lurk. Sanofi will struggle to finish the full course.

Valeant’s new CEO a good choice for a dim future

25 Apr 2016

Joseph Papa’s skill running a tight ship at Perrigo is sorely lacking at his new company. Valeant needs to keep staff, sell assets and pay down debt, all while coping with falling drug prices that have also hit Papa’s old firm. First he needs to ensure Valeant avoids a default.

Tech discovering dark side to price deflation

19 Apr 2016

Illumina rode the rapidly falling cost of genetic sequencing to a $26 bln valuation as demand bloomed. But a warning of slower growth evaporated almost 25 pct off the stock. Heady multiples only survive if ever cheaper overheads foster ever more uses for a company’s products.

Abandoned Pfizer deal leaves all sides tainted

6 Apr 2016

The U.S. Treasury looks bad for changing the rules to kill the $160 bln merger with Allergan. Lawmakers’ inaction encouraged such tax-driven transactions. But Pfizer and CEO Ian Read bear the most responsibility for wasting time and resources pushing an overpriced, risky deal.

Pfizer-Allergan is dead, merger arb isn’t

6 Apr 2016

Some big funds were caught out by the failed $160 bln pharmaceutical merger, the second such “Arbageddon” after AbbVie-Shire. Embarrassing as that is, the business of betting on deals can withstand the shock: arb performance is okay, and big flops like this can be easily avoided.

Allergan has chance at fresh start without Pfizer

5 Apr 2016

The $160 bln deal is on the rocks after Treasury killed the tax rationale, erasing 15 pct of Allergan’s market value. A timely sale of its generic-drug business to Teva for $41 bln will cushion the blow and contain comparisons to Valeant. The financial flexibility is much needed.

New M&A marriage vows raise cost of fooling around

31 Mar 2016

Markit must ensure the CEO of merger partner IHS gets the top job or risk breaking the combined company’s bylaws. AbbVie gave the boss of Pharmacyclics similarly ironclad rights. A rise in stock deals is forging stronger prenuptial agreements for so-called social issues.

Valeant’s best shot depends on lenders’ mercy

30 Mar 2016

The drugmaker wants to extend its deadline for filing financial statements and ease interest-coverage covenants. The latter request would insure against a cash-flow crisis but it’s still alarming. Creditors will demand a pound of flesh and control of Valeant’s destiny in return.

U.S. gene tester puts China bids under microscope

23 Mar 2016

Affymetrix is in a bind. Rival Thermo Fisher made a solid $1.3 bln offer that’s now below the target’s share price. Former bosses swooped in with a higher non-binding bid backed by little-known Chinese funders. The board must choose – and fast. The question: Does it feel lucky?

Valeant’s multiple organ failure puts it in ICU

21 Mar 2016

The beleaguered drugmaker has found accounting improprieties. It is booting CEO Mike Pearson but ex-CFO Howard Schiller has refused to quit as a director. The board, the numbers and the strategy are fractured. Some $30 bln of debt means Valeant risks an Enron or WorldCom endgame.

Valeant plays chicken with death spiral

15 Mar 2016

The pharma company’s failure to file audited results has started a countdown to default that vaporized 40 pct of its market value in early trading. Executives are mulling selling assets. But with so many questions about its financials unanswered, Valeant’s outlook is bleak.

Valeant’s new directors portend suits and sales

9 Mar 2016

The drug firm’s challenges can be seen in its new board appointees: an M&A specialist, a law professor and retired judge, and a drug entrepreneur with experience selling companies. These directors can help Valeant prepare for a future chock-full of litigation and divestitures.

Valeant CEO back with less power and no glory

29 Feb 2016

Mike Pearson has returned from illness, stripped of his chairmanship. The $25 bln drugmaker also withdrew guidance and will further delay reporting 2015 results. Marginally better-looking governance isn’t enough to give investors like Bill Ackman hope of reversing losses.

Bayer CEO can bide time on agri-business spinoff

25 Feb 2016

A merger wave among agriculture-chemicals makers may entice incoming boss Werner Baumann to put the German drugmaker’s crop science unit in play. A sale or the like could fetch up to 39 bln euros and unlock value. Yet Bayer’s record revenue and rising profit mean there’s no rush.

Overdue Mylan deal is not the one investors wanted

11 Feb 2016

Three months after rival Perrigo refused its $26 bln offer, the drugmaker has agreed to buy Sweden’s Meda AB. Though the $7.2 bln transaction makes strategic sense, the 92 pct premium is hard to justify. Mylan might have been better served by trying to sell, rather than buy.