Healthcare

AstraZeneca gets a summer reprieve

19 May 2014

The UK pharma group rejected Pfizer’s latest $117 bln approach, but indicated the U.S. suitor’s price was almost acceptable. Strong cancer trial data in June could protect Astra’s independence. Even if the target’s resistance weakens, Pfizer has boxed itself in until August.

Rob Cox: The worry now is a brewing M&A bubble

13 May 2014

The corporate urge to merge has gone into global hyper-drive. Activity has surged as investors egg companies on and bid up the shares of acquirers well beyond mathematical prudence. When new metrics to justify the irrational are trotted out, it’s time to exercise caution.

AstraZeneca is not the UK science base

7 May 2014

UK politicians worry that a Pfizer takeover would erode British scientific competence. But if that foundation were strong, the deal would hardly matter. The drug industry has fundamental problems. That’s why Astra has been slashing R&D by itself, and cost-cutting is driving M&A.

Merck cashes in consumer chips for wise drug wager

6 May 2014

The pharmaceutical firm’s $14 bln sale of its Claritin-to-Coppertone business frees cash for developing a potentially breakthrough cancer medicine. With the company’s odds for success better than in years, selling high and doubling down on possible blockbusters seems a smart bet.

AstraZeneca implies surrender can be bought

6 May 2014

The UK drugmaker has launched its defence against Pfizer’s $106 bln approach by detailing a portfolio with a potential 73 pct of added sales by 2023. It sounds more like an inventory waiting to be valued than an argument for independence. The chances of a deal have barely fallen.

Tax steroids justify Bayer’s $14 bln Merck deal

6 May 2014

The German pharma giant is paying an eye-watering 21 times latest EBITDA for Merck’s consumer unit. The price is high in the context of achievable cost savings and hoped-for revenue benefits. But the acquisition makes strategic sense and sizable tax breaks will help.

Pfizer’s M&A churns out more pennies than pounds

2 May 2014

A $106 bln AstraZeneca bid would deliver savings. But drug mega-deals create little value. Pfizer could’ve bought most of the top biotech firms instead of Wyeth, its last acquisition, and had higher returns. Buying stakes in innovative companies is a preferable route to riches.

Astra has small tactical advantage over Pfizer

1 May 2014

Time can benefit bidders rather than targets – that’s why Kraft left Cadbury flailing for months. But uncertainties around regulatory clearance and Washington politics complicate the dynamics of Pfizer’s approach to AstraZeneca. The U.S. group will want a quick, recommended deal.

Pfizer needs to do more to win AstraZeneca

28 Apr 2014

The U.S. pharma group is pressuring Astra to engage by revealing fleeting past discussions about a $99 bln cash-and-stock approach. Pfizer will want to see this through. To extract more value, Astra CEO Pascal Soriot can rubbish Pfizer’s bid currency and talk up other deals.

U.S. investors see yet another big acquirer as hip

24 Apr 2014

Zimmer’s $13 bln deal for rival Biomet promises savings. But the medical device maker is giving too much away to its target’s private equity owners for that to justify a 15 pct, or $2.3 bln, pop in its market value. This time, enthusiastic share buyers are betting on growth.

Valeant’s M&A machine may soon overheat

24 Apr 2014

Some of the brain trust behind the hyper-acquisition strategy is leaving the board just as the pharmaceutical company embarks on its biggest deal. Buying Allergan would swell Valeant to $75 bln with debt of eight times EBITDA. Finding meaningful targets will be much harder.

AstraZeneca can avoid self-medicating with M&A

24 Apr 2014

Reported interest from Pfizer puts pressure on Astra CEO Pascal Soriot. He could bulk up by buying a rival like Actelion or Shire. Or he could find a merger partner. But as Q1 results show, Astra is refilling its pipeline and investors recognise this. Plan A is working.

Valeant will need even more fancy legal footwork

23 Apr 2014

The pharmaceuticals company and hedge fund boss Bill Ackman built their Allergan stake by deftly tiptoeing around disclosure and insider trading rules. But a poison pill, antitrust issues and other pitfalls remain for the many law firms in the deal to navigate.

Philips can still shine despite darker outlook

22 Apr 2014

The $30 bln electronics group’s flatlining revenue in Q1 has dimmed near-term growth hopes. Troubles with traditional lighting and healthcare scanners could persist. But the basic investment case for Philips looks sound, especially if weaker emerging markets rebound. 

Valeant can boost its $47 bln bid for Allergan

22 Apr 2014

The pharma M&A machine, working with hedgie Bill Ackman, thinks it can cut $2.7 bln of costs from the Botox maker. At Valeant’s single-digit tax rate, that’s worth nearly $25 bln. And that’s just the start of potential benefits. The deal would add up with a much bigger premium.

Pfizer stock poses best argument against mega-deal

21 Apr 2014

Sure, buying $84 bln AstraZeneca would yield tons of savings, and put cash trapped overseas to work. But big pharma deals often create more harm than good. Pfizer’s deal binge last decade led to poor investment returns. Subsequent slimming down has caused it to nearly double.

From Ally to Zoe’s, IPOs hint at back to basics

15 Apr 2014

Investors had an appetite for most any new issue until last week. Six of 10 offerings couldn’t fetch the desired price and six were yanked as fear again mingled with greed. A fresh crop of sellers, including Moelis and Weibo, may encounter a more rational market than expected.

Market health gives Obamacare long life

2 Apr 2014

The president’s insurance scheme secured the 7 mln registrants it was targeting. Stocks in the healthcare sector also have soared by 81 pct since the Affordable Care Act was enacted. The Republican budget may ignore the plan, but strong forces have entrenched it.

Baxter puts conscious uncoupling on pharma radar

27 Mar 2014

The $40 bln healthcare giant is separating its biotech and medical products units. Baxter’s spinoff history suggests this latest move will create value for shareholders. This, and the success of Pfizer’s and Abbott’s recent splits, will encourage other pharma giants to follow.

Mega-medical buyout Biomet limps back to market

18 Mar 2014

Private equity has reaped good returns from several big LBOs that suffered near-death experiences. So the far healthier Biomet, taken private for $11.4 bln, might seem a natural winner. But a decline in prices for its devices means backers will endure nagging injuries.