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.
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.