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from DealZone:
Brief respite from brickbats
London's bankers were hardly in celebratory mood last night, post-Darling, but Financial Times unit mergermarket persevered with their 2009 M&A awards, crowning Lazard financial adviser of the year for working on deals such as BGI-Blackrock and Glaxo-Stiefel, and lauding Swiss drugmaker Roche for its $47 billion buyout of Genentech. See the extensive list of winners -- including Financial Adviser of the Year, Visegrad Group [that's the Czech Republic, Poland, Hungary and Slovakia] -- here.
Curiously, though, there was nothing for Morgan Stanley -- the No. 1 bank year-to-date for announced M&A globally and in the United States, according to Thomson Reuters data. And arch-rival Goldman Sachs was awarded just for its work in Germany, while Europe's top M&A house in 2009, Deutsche Bank, also went empty handed.
Thomson Reuters magazine Acquisitions Monthly hosts its bash in January.
from Commentaries:
Apple-Google learn Corporate Governance 1.0
LONDON, Aug 3 (Reuters) - The resignation of Google CEO Eric Schmidt from Apple's board should come as no surprise to anyone with an inkling of what corporate governance means.
But then Silicon Valley's idea of corporate boards has long consisted of cozy, interlocking directorships which would be considered collusion in most other industries.
Google's CEO is not leaving Apple's board voluntarily. He is only stepping down in response to the increased government scrutiny of obvious potential conflicts of interest between the two companies.
Yet regulators shouldn't be content with Schmidt's departure. The truth is that Apple and Google have been heading into the same markets for years. A veritable chain of overlapping business ties remain in place even if the most obvious formal link is now broken.
The chairman of Apple's board, former Genentech CEO Art Levinson, remains on Google's board. Another Google board member, Ann Mather, is the former chief financial officer of Steve Jobs' former animation company, Pixar Studios.
Paul Otellini, the CEO of Intel Corp, Apple's main chip supplier, also sits on Google's board. Al Gore remains on Apple's board, but in his new turn as venture capitalist he has many business ties to Google and its founders. Gore is a partner of Google board member John Doerr at legendary Silicon Valley VC firm Kleiner Perkins.
For months, the U.S. Federal Trade Commission has been examining Schmidt's participation on the boards of the tech world's two most dynamic companies. Last week, the Federal Communications Commission said it was looking into Apple's decision to reject a Google phone application to run on the iPhone.
This reader generally finds Eric Auchard easier to follow than in the present article, which ought to be interesting, but in my opinion leaves much room for confusion.
Is the point here that Apple and Google are not competing sufficiently against one another, or that they’re competing too much and if so, how could this possibly be the case? Frankly, I’d like to see them compete more rather than less, but it’s really hard to tell from what has been written here whether they do and what makes them any worse than [insert long list of major U.S., corporations here].
In passing, would it not be appropriate also to actively question the debilitating role in post-IPO terms that VC can and too often does exert upon emerging industries, by dictating terms of policy and players involved? There’s more than a smattering of governance ethics needing dealt out and enforced in the entire business sphere of so-called Venture Capital, and has been for over a decade. Which brings us to the present.
Corporate governance – or lack thereof – would be a fundamental topic of immense importance if properly argued across the board in American [for lack of a better word] industry.
I for one would like to see corporate cartel considerations scrutinized more closely in general, rendered transparent, (within reason) enforceable and, particularly in this case, put in better perspective before concluding the debate.
from DealZone:
Avastin’s Placebo Effect
Roche shareholders must feel as though they got some bad stuff when they handed over $46.8 billion to buy Genentech in March. In a major study, Avastin, Genentech's colon cancer drug, failed to prevent the recurrence of colon cancer in patients who had undergone surgery. Roche shares promptly tumbled.
Roche investors were thinking Avastin sales would double from $4.4 billion, and Roche still sounds confident that the drug will do about that well treating colon cancer in its earlier stages, as it was designed to do. Roche said a positive result on the study was not a foregone conclusion, calling its success a "coin toss." But this is unlikely to placate its stockholders because it implies Roche didn't adequately account for the risk.
In fact, it looks increasingly like Roche was high on Avastin's prospects when it raised its offer for Genentech, apparently trying to get in before a would-be positive result from the study drove Genentech's stock any higher.
Deals of the day:
* News Corp's stake in German pay-TV broadcaster Premiere will grow to 30.5 percent as the media conglomerate agreed to take up almost a third of new shares issued in Premiere's second capital hike.
* British telecoms and retail group Carphone Warehouse beat fourth-quarter customer growth forecasts and raised cash flow guidance for 2009-10, boosting its shares as it confirmed plans to split in two.
* British property investor Carpathian received a 20 euro cents per share indicative offer from New Europe Property Investments, the companies said, sending Carpathian shares up as much as 32 percent.
from DealZone:
Another deal in healthcare: what’s the magic pill?
As dealmakers everywhere struggle to get deals done, the healthcare industry seals yet another one.
Express Scripts has agreed to buy health insurer WellPoint's prescription business for $4.68 billion in a significant expansion for the U.S. pharmacy beenfit manager. The deal will be a concoction of cash and up to $1.4 billion in common stock, and will generate more than $1 billion of incremental EBITDA.
This comes on the heels of Pfizer's $68 billion acquisition of Wyeth, Merck's $41.1 billion takeover of Schering Plough and Roche Holding's $46.8 billion buyout of Genentech. Granted, this isn't a pharma deal, but it still falls under the umbrella of the healthcare sector.
And in a market where deals aren't getting done -- mainly due to tight credit conditions and partly due to value gaps between buyers and sellers (due to the huge declines in stocks late last year) -- you've gotta ask: what's the magic pill?
Deals of the day:
* Indian mid-sized IT outsourcer Tech Mahindra won a bidding auction for a majority stake in fraud-hit Satyam Computer Services Ltd, edging out Larsen & Toubro, seen by some analysts as the favourite bidder. * India's Larsen & Toubro, which has built up a 12 percent stake in Satyam Computer Services, plans to hold on to the stake, its chief financial officer said on television channel NDTV Profit. * Pakistan's Habib Bank Ltd. (HBL) and MCB Bank are interested in buying the operations of Royal Bank of Scotland (RBS) in the South Asian nation, the two banks said in separate statements on Monday. * A bid by Japan's Mitsubishi Rayon Co for unlisted British chemicals maker Lucite International has hit a hurdle in China where regulators have delayed the acquisition, two sources briefed on the matter said.
* Orascom Telecom said on Monday it was proposing to extend the deadline to April 15 for implementing a court order for the Egyptian firm to sell its shares in mobile firm Mobinil to France Telecom.
from DealZone:
Good medicine for Morgan Stanley
Morgan Stanley's jump from 10th to first in our M&A league table should put them on cloud nine. The first quarter was busy with drug deals, and Morgan Stanley was in on the biggies: advising Wyeth on its $64.5 billion acquisition by Pfizer, and Schering Plough on its $46 billion takeover by Merck. And with the ink still to arrive on the paper of both deals, more good stuff could be on the horizon. The trick for Morgan Stanley, and anyone wanting to take down the king of the hill, is to spot and exploit the trend.******If drug deals remain du jour -- and many expect the sector to stay hot, despite all the swallowing going on -- the trend will certainly be toward Biotech. The markets for biologics and pipeline-filling cancer treatments have been strong in the face of expected government action to lower doctor and drug bills.******The heightened merger activity in Big Pharma has switched the tables a bit in the sector. After Roche's nearly $47 billion acquisition of Genentech, analysts became increasingly convinced that the remaining big biotechs like Celgene, Gilead, Genzyme, Biogen Idec and Amgen could emerge as buyers, given that traditional Big Pharma is either digesting deals or just not so big anymore.******Christopher Kaufman; DealZone Editor******Deals of the Day:******* Drug maker Lupin Ltd said it has acquired a 51 percent stake in Multicare Pharmaceuticals Philippines Inc, marking the Indian firm's foray into the $2.5 billion Philippines pharmaceuticals market.******* Britain-based dairy products maker Dairy Crest said it had sold its 49 percent stake in Yoplait Dairy Crest (YDC) to the Yoplait Group for 63.5 million pounds ($92.66 million) and that it would use the cash to reduce debts.******* Austrian steelmaker Voestalpine said its North American unit, VAE Nortrak had acquired U.S-based Leading Enterprises Inc, a supplier of speciality components for railway tracks, as part of a plan by the company to expand its railway division.******(PHOTO: A sign is pictured on Wall St. near the New York Stock Exchange in New York November 25, 2008. REUTERS/Lucas Jackson )
from DealZone:
The next best drug deal
After eight months of playing hard to get, cancer drug maker Genentech has agreed to be bought by Roche for $95 per share -- a price Roche didn't think it would have to pay. The strength of the dollar makes the deal even more expensive for Switzerland-based Roche, but it may feel it got off easy, given talk that Genentech management might hold out for as much as $120 per share.
Following Pfizer's bid for Wyeth and Merck's offer for Schering-Plough, that makes nearly $160 billion in Big Pharma deals so far this year. The last two big U.S. pure pharma companies still unattached are Bristol-Myers Squibb and Eli Lilly. Both are probably feeling a bit lonely, particularly Bristol, which installed a dealmaker CEO a couple of years ago.
Bristol and Lilly, the grande dames of the industry, face increasing competition from generics and are struggling to keep their pipelines pumped up. They've been hunting for exciting biotechs and makers of hot new biologic drugs, preferably in cancer or another big disease market, as a matter of survival. Lilly already has some exposure here, having bought Erbitux maker ImClone last year for a far less exciting $6.5 billion.
Genentech's demise leaves Amgen as the big biotech in the living room. At about $50 billion, it's half the size of Genentech, but $10 billion bigger than Bristol Myers and worth $15 billion more than Lilly. There are plenty of smaller, potentially riskier biotechs out there, but maybe Not-So-Big Pharma will have to compete with bigger biotechs in the Darwinian drive for the next best drug.
Other Deals of the Day:
* Gilead Sciences agreed to acquire CV Therapeutics for $20.00 per share, in a transaction it said was valued at about $1.4 billion.
* Japanese non-life insurers Sompo Japan Insurance and NipponKoa Insurance plan to merge, an industry source said, in the second deal in less than two months in a sector struggling with slumping demand and a dwindling, ageing population.
from DealZone:
It’s in the Genes
The market may be sickly, but Genentech investors are in that most rare place, holding a stock that is close to its lifetime high of just over $100 with a suitor repeatedly raising its bid for the company like it was 2006 all over again.
While Swiss drugmaker Roche says its latest official bid of $93 per share for the U.S. biotech, made last Friday, is fair, a source tells us they are prepared to go to $95, valuing the deal at $46.7 billion. Roche shareholders seem happy with the bidding so far, trading the shares higher today as the company talks to investors at its AGM.
Genentech would give Roche a big shot of lucrative cancer drugs and other medicines, including Avastin, which is approved to treat advanced colon, breast and lung cancers and is being tested for several other uses. And with Big Pharma marriages all the rage in '09, Genentech investors must feel like the best natural selection in the market right now.
Deals of the Day:
* The parent of China Shipping Development may sell its LNG business with the parent of PetroChina to the listed vehicle, analysts said.
* China is reviewing Coca-Cola's bid to acquire China Huiyuan Juice Group under the anti-monopoly law, Commerce Minister Chen Demin said on Tuesday.
* Santander, Spain's biggest bank, bought out Tokio Marine Holdings' stake in a jointly owned Brazilian insurance group for 678 million reais ($284.9 million), aiming to strengthen its position in Brazil.
from Blogs Dashboard:
It’s in the Genes
The market may be sickly, but Genentech investors are in that most rare place, holding a stock that is close to its lifetime high of just over $100 with a suitor repeatedly raising its bid for the company like it was 2006 all over again.
While Swiss drugmaker Roche says its latest official bid of $93 per share for the U.S. biotech, made last Friday, is fair, a source tells us they are prepared to go to $95, valuing the deal at $46.7 billion. Roche shareholders seem happy with the bidding so far, trading the shares higher today as the company talks to investors at its AGM.
Genentech would give Roche a big shot of lucrative cancer drugs and other medicines, including Avastin, which is approved to treat advanced colon, breast and lung cancers and is being tested for several other uses. And with Big Pharma marriages all the rage in '09, Genentech investors must feel like the best natural selection in the market right now.
Deals of the Day:
* The parent of China Shipping Development may sell its LNG business with the parent of PetroChina to the listed vehicle, analysts said.
* China is reviewing Coca-Cola's bid to acquire China Huiyuan Juice Group under the anti-monopoly law, Commerce Minister Chen Demin said on Tuesday.
* Santander, Spain's biggest bank, bought out Tokio Marine Holdings' stake in a jointly owned Brazilian insurance group for 678 million reais ($284.9 million), aiming to strengthen its position in Brazil.
from DealZone:
Roche basks in Genentech defence
It wasn't quite the market response Genentech CEO Arthur Levinson was looking for.
Levinson and his team worked hard to make the bull case for the biotech group by providing long-term forecasts to prove it is worth far more than Roche is willing to pay. Yet Genentech shares still ended down 4.6 percent, or nearly $4, in line with a grim market on March 2.
Roche investors, by contrast, were in distinctly chipper mood on March 3, marking up the Swiss group's stock by more than 5 percent.
Why the skewed response? JP Morgan analysts put it down to the fact that positive news for Genentech is also good for Roche (after all, it already owns 56 percent of the U.S. business) and such news could actually have a bigger impact on the Swiss group because it trades on a much lower multiple.
"Most factors cited by Genentech to highlight the value of the business represent an even greater upside to Roche shareholders, as that upside could be leveraged outside the U.S. and should boost what is currently a much lower Roche valuation," the brokerage's analysts adds.
from DealZone:
Hard ball from Basel
In the battle for control of the world's most valuable biotech company, Roche CEO Severin Schwan is playing hard ball. The reason is simple: he needs to clinch a deal that clearly enhances earnings.
The Swiss drugmaker has been the most highly rated Big Pharma company for years but financial results last week suggest it may be losing its mojo. Certainly, its premium rating is slipping.
Genentech had wanted $112 a share but Roche's tender offer for the 44 percent of Genentech it doesn't already own actually cuts the price to $86.50, or about $42 billion, from the $89 proposed last July.
The coming weeks promise plenty of argument about the true value of Genentech. In particular, the market and clinicians are awaiting results from a trial of blockbuster drug Avastin in colon cancer patients who have had their tumours removed through surgery.
Success would greatly expand Avastin sales, but the jury is out on how well Avastin will work in this setting. Roche sees a 55 percent chance of success; Genentech puts the odds at 61 percent.
