Healthcare

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.

Fear is key to Ebola’s economic contagion

18 Aug 2014

The virus ravaging parts of Africa has yet to spread elsewhere. Yet Asia’s SARS crisis in 2003 showed how changes to behaviour can hurt growth and productivity more than an actual disease. Ebola seems harder to catch, but more deadly. That could make for a more pronounced effect.

U.S. social security suffers from low-rate longevity

29 Jul 2014

The retirement and disability funds will run out by 2033, nine years earlier than projected 10 years ago. After that, benefits will have to go down – or taxes up by nearly 3 pct of income on average over 75 years. Low interest rates worsen the problem and make fixes more urgent.

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.  

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.

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.

How merger momentum could explode past $4 trln

1 Jul 2014

With about $1.8 trln of M&A so far, 2014 is shaping up to be the biggest year since 2007. If deal volume returns to its typical proportion of global market capitalisation, it would hit $4.5 trln next year. So much activity so quickly, though, probably means more value destroyed.

Philips lighting split is a bright idea

30 Jun 2014

The Dutch conglomerate is restructuring again, moving high-powered LEDs and car lights into a standalone unit with 1.4 bln euros in sales. The business is fast-growing and would benefit from outside capital. Stepping out of the parent’s shadow should help.

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.

AbbVie has to dig deeper to win Shire

20 Jun 2014

The U.S. pharma group’s recent $46 bln bid proposal equates to a lowish 30 pct premium over Shire’s value before speculation intensified this week. Likely synergies and possible rival offers justify Shire’s rebuttal. But the target can’t be complacent about investor support.

Shire’s independence harder to defend than Astra’s

18 Jun 2014

The UK-listed, Dublin-based pharma group is again in the grip of bid speculation after a frenzy of M&A in the sector. Astra may have repelled Pfizer, but the circumstances are very different. At least Shire has the outside chance of using an auction to get a bidder to pay up.

Medtronic-Covidien deal is marriage of convenience

16 Jun 2014

The $42.9 bln takeover includes a near-$10 bln premium that exceeds the estimated value of synergies. Stents and sutures aren’t an obvious fit, and moving from Minneapolis to Dublin won’t cut Medtronic’s tax bill. Freeing up overseas cash is too shallow a reason to tie the knot.

Smith & Nephew returns to M&A spotlight

28 May 2014

The British medtech firm’s shares jumped on a report of bid interest from Stryker. The U.S. rival ruled out bidding for six months. But the market looks keen on a takeover of S&N, the subject of perennial bid talk. There could be synergies, scale and tax benefits.

Valeant’s sweetener comes off a little defensive

28 May 2014

Upping its bid for Allergan to $49 bln disappointed investors on both sides. Using a messy financial instrument probably didn’t help, especially after the target rejected the deal math and compared its suitor to Tyco. Valeant needs to do more to reclaim the aggressor’s role.

Nestle’s skincare buy-in has opportunistic streak

28 May 2014

The Swiss company, best known as a chocolatier, is paying Canada’s Valeant $1.4 bln for the marketing rights to a clutch of beauty treatments. It is Nestle’s first big move in the sector after February’s deal with L’Oreal. There are wrinkles. But they are worth wearing.  

Astra-Pfizer needs a fresh start later in the year

21 May 2014

Some shareholders want the UK pharma company to talk to its American suitor now. But there is no honest route to a higher bid until August. Talks in the dying days of the bid timetable could actually delay a full move. An amicable cooling off period is the best plan.

Valeant’s slashing could trigger FDA lashing

20 May 2014

The Canadian pharma M&A machine buys rivals and strips costs to the bone. It promises to cut Allergan’s R&D spending from $1 bln to $200 mln and still develop drugs. That doesn’t look sustainable. It may not be enough to even finish studies on existing drugs that regulators require.

Loophole offers Pfizer risky way back into AZ deal

20 May 2014

The U.S. pharma group noted that it could technically make a higher offer for Astra if the target first agreed to its “final” $119 bln proposal. After this dodge, Astra could accept the real, higher price. But the UK takeover watchdog would almost certainly reject such cunning.

Pfizer spins $100 bln-plus deal as inessential

19 May 2014

Not many companies could back off an aggressive 12-digit shopping spree with credibility intact. But with its offer for AstraZeneca rejected, Pfizer’s shares are roughly back where they started. Its pre-existing plan to eventually break itself up makes the UK deal look optional.