J&J’s corpulence defense weighs heavy 2 Jun 2016 The bulging healthcare conglomerate is swallowing hair-care firm Vogue for $3.3 bln in defiance of calls to break up. J&J’s $312 bln market value makes it a hard target for activists. Yet its obesity has created ailments from poor M&A digestion to mediocre shareholder returns.
Thermo Fisher’s FEI deal holds up under microscope 27 May 2016 But that’s only if the healthcare M&A machine can boost sales at its $4.2 bln quarry. Reducing taxes and cutting costs at the maker of electron microscopes only gets Thermo partway to justifying the price tag. Thermo’s track record gives investors some comfort it can do this.
AstraZeneca glitch cements M&A discount 27 May 2016 A blockbuster drug the UK group bought in a $2.7 bln deal has been delayed. The production glitch could mean just a few months holdup, but highlights why Astra trades at a lower valuation than peers. Buying and selling businesses is a risky way to manage a looming patent cliff.
Health M&A’s shots of state oversight may be toxic 25 May 2016 Missouri trustbusters plan to oppose Aetna’s $37 bln union with Humana absent changes. That probably won’t kill the deal, but the U.S. insurers must still satisfy regulators in five crucial states and Uncle Sam. No wonder investors’ prognosis for this and similar mergers is grim.
Egos may kill $54 bln health deal before watchdogs 23 May 2016 Cigna and Anthem haven’t consummated their merger, yet the U.S. insurers are squabbling over a lawsuit, information sharing and executives’ roles. The disharmony could make the deal fall apart. At the very least, it will make it harder to push it past antitrust regulators.
Pfizer’s $5.2 bln Anacor bid dodges bigger issue 16 May 2016 The drug giant may have bagged a good deal for the maker of eczema and toenail fungus remedies – assuming Anacor gets all needed approvals and sales soar. Bolt-on acquisitions can be helpful, but the important question for $200 bln Pfizer remains: will boss Ian Read break it up?
Baidu selloff understates long-term health risks 10 May 2016 Regulators have ordered China’s top search engine to rein in healthcare advertising after a scandal. That could knock as much as a fifth off earnings. Investors who have marked the shares down by 13 pct so far may be underestimating the broader impact on Baidu’s business model.
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.
Stupid names can’t hurt good companies 5 May 2016 Healthineers, Siemens’ new brand for its healthcare unit, is reminiscent of a hero in a 1950s science fiction comic. Users of its brain-scanners are unlikely to care. For investors the goofy name is, at the margin, a good thing: it shows a spin-off may have become more likely.
Medical firms’ $18 bln merger lacks clear logic 3 May 2016 Healthcare data miner IMS is uniting with Quintiles, a manager of drug trials. Each will own about half the combined company, and other than some cost savings, the reasons for combining are a bit nebulous. The presence of buyout firm TPG on both sides may offer some clues.
Baidu shows health is a huge flashpoint in China 3 May 2016 A dying student accused the search giant of promoting false medical information. The ensuing probe has cut $5 bln from Baidu’s market value: a big move but not an overreaction. Health scandals are highly sensitive and authorities pay close attention to outbursts of online anger.
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.
Hong Kong finds Alibaba dealmaking in poor health 26 Apr 2016 Regulators say the e-commerce group’s 2014 investment into its health unit breached takeover rules. Details are scarce and Alibaba does not have to compensate shareholders. Even so, the latest run-in is another reason for Hong Kong investors to be wary of Jack Ma’s company.
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.
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.
Best U.S. health-insurance merger may be none 10 Mar 2016 UnitedHealth’s four main rivals are fighting to push their deals past state and federal regulators. The $115 bln UnitedHealth will look smart if the mergers, each worth about $70 bln in current combined market value, are blocked. It might even win out if the deals pass muster.
Trumpcare looks unhealthily expensive 3 Mar 2016 Apart from repealing Obamacare, there are few specifics in U.S. presidential wannabe Donald Trump’s healthcare reform plan. But a first cut based on similar ideas suggests billions in extra federal costs despite millions fewer Americans being insured. That doesn’t seem so great.