Healthcare

HMA’s $2.4bn recap raises red flags

22 Jan 2007

The US hospital operator says its huge leveraged dividend payout will benefit shareholders. But it also shields management from takeovers. Executives get to keep their jobs and reap cash windfalls on their stock. Other shareholders may have been better served by a plain buyout.

HMA’s $2.4bn recap raises red flags

22 Jan 2007

The US hospital operator says its leveraged dividend payout will benefit shareholders. But it also shields management from takeover threats. Executives get to keep their jobs and reap cash windfalls on their stock. Other shareholders may have been better served by a plain buyout.

Misys executives walk the plank

18 Jan 2007

Two of the departing board members supported last year's botched MBO. The other had failed to fix the ailing healthcare software division. This should give new boss Mike Lawrie a chance to start afresh. But the UK software group is still far from being righted.

Smith & Nephew hasn’t dodged the Biomet bullet

19 Dec 2006

A consortium of private equity firms may have beaten it in the $11bn buyout of the orthopaedics maker, sending S&N shares higher. But you can bet Biomet will be back on the menu in a few years time, after its options probe is finished and at a higher price than now.

Google turns eye to healthcare

5 Dec 2006

One of its executives, on the company blog, hinted at the internet giant's desire to wade into the industry by digitising medical records. Doctors and hospitals lack the incentive to change. But Google may use its advertising prowess to entice cooperation and empower patients.

S&N’s $10bn Biomet deal could make it vulnerable

5 Nov 2006

Buying the US orthopedics group seems strategically sound. But it doesn t obviously add value. What value it does add comes from gearing up. Unless it can pay less or find more synergies, S&N should probably gear up and return cash. Otherwise it risks being snapped up itself.

Bankers more willing to back buyout hostility

4 Sep 2006

Barcap and RBS have just backed a $2.1bn hostile bid for Capio of Sweden. It isn't the first. Ferrovial bid for BAA earlier this year. The gloves aren't off entirely. Bankers are more willing to back unsolicited bids but only when there's scope for an agreed outcome. Barcap and HBOS have just backed a $2.1bn hostile bid for Capio of Sweden. It isn't the first. Ferrovial bid for BAA earlier this year.

HCA illustrates LBO land’s maturity

28 Jul 2006

While it may look like a record deal, in so many respects this is a sober one compared to KKR s 1989 buyout of RJR. The firms are committing double the equity, and the size of the bets relative to their funds is fractional compared to RJR.

Aetna pummelled by fears of spiralling costs

28 Jul 2006

The US health insurer beat secondquarter estimates. Yet shareholders sent the stock crashing. Aetna s healthcare bills rose faster than premiums again. Investors are concerned healthcare inflation will rise out of control.

The biggest risk in HCA deal is political

25 Jul 2006

Government intervention in healthcare could play havoc with the fine financial calculations underlying the hospital group's buyout. HCA's close to ties to the Senate's majority leader Bill Frist have helped in the past. But they could turn counterproductive.

Will HCA’s $33bn LBO best RJR’s return?

24 Jul 2006

The takeover of the hospital chain by Bain, KKR and Merrill establishes a new private equity record, trumping the RJR deal. But unlike the lacklustre performance of its predecessor, it is easy to see how HCA s new owners can make this one work out financially.

Wellcome Trust taps exuberant credit markets

3 Jul 2006

The £12bn UK charity is borrowing £500m at ultralow rates for 30 years and using the proceeds for investment. Loose credit markets make this a smart bit of arbitrage. Unfortunately, few other European charities are likely to follow.

Full steam ahead for healthcare buyouts with £2.2bn deal

25 Apr 2006

Netcare s purchase of GHG as the largest healthcare buyout in Europe shows that enthusiasm for the sector is still strong. Aside from an ageing population, a key driver for these transactions is demand for the properties these companies hold.

Investor AB’s $4.9bn Gambro buyout looks clever

4 Apr 2006

The Swedish investment company is participating in the buyout of the healthcare company in which it already owns a 20% stake. The deal almost triples its stake. Assuming normal levels of leverage, Investor will also take out E90m in cash.

Boston slugs J&J with $27bn Guidant bid

17 Jan 2006

The US medical device company looks to have knocked Johnson & Johnson out of the bidding for Guidant by offering $80 per share. J&J could rise from the canvas. But letting Boston Scientific claim Guidant is a better idea.

Bird flu could create economic havoc

10 Jan 2006

The odds on a pandemic have risen after an outbreak in Turkey. It has highlighted the inadequacy of many countries' contingency planning. If the disease does start to spread between humans, the economic disruption could be immense.

Biotech has mixed record on 30th anniversary

6 Jan 2006

The industry may have bright prospects, but biotech stocks have not been a cureall. Returns have been unevenly distributed and volatile. The market doesn t appear as attractive now as it did in 2002. But some value probably resides in the biotech minnows.

Boston Scientific debt deal sign of buoyant times

13 Dec 2005

The medical devices maker has been able to borrow $14bn at thin margins to buy Guidant despite its aggressive leverage. Following hard on the heels of Koch s $11bn mega loan, Boston s deal shows just how eager banks are to lend.

HealthSouth turncoat had it coming

12 Dec 2005

The 5year sentence for the former HealthSouth finance officer who testified against acquitted boss Scrushy may look harsh. But it's wrong to conclude he s paying for Scrushy. There s a lesson here for cooperating witnesses in future fraud trials.

Boston Scientific springs $25bn Guidant bid

5 Dec 2005

The surprise counterbid puts J&J on the back foot. It cut its bid, saying Guidant was worth less than it thought. Raising now would be hard. Boston's tactics have been smart, but has it also been smart on value? The fall in its share price suggests investors aren't yet convinced. Boston's tactics have been smart. But has the group been smart on value?