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from Breakingviews:

Amgen boss makes a prime breakup target

By Robert Cyran

The author is  a Reuters Breakingviews columnist. The opinions expressed are his own. 

Amgen’s boss makes a prime breakup target for Dan Loeb. Former Morgan Stanley banker Robert Bradway has run the $109 billion biotech being eyed by the activist investor for the past two years. The idea of splitting such companies into a cash cow and a growth arm comes up often, but rarely happens. Amgen may be the exception.

Its stock has significantly lagged rivals Gilead, Biogen Idec and Regeneron over the past decade. Sales of its blockbuster drugs for anemia have sharply fallen after safety concerns emerged. Loeb’s primary target are the company’s weaknesses; he wants Bradway to cut expenses – its prodigious R&D has generated more expenses than hits - and improve capital allocation. But the activist also wants the company to consider the more radical idea of splitting in two.

It’s not a new idea for the industry. Sanofi studied it a decade ago. Merck and Pfizer mulled it over more recently. The idea is that one company takes the drugs already on the market, generating cash and paying dividends. The other focuses on drugs under development.

from Breakingviews:

AbbVie U-turn shows Shire was mostly about tax

By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

AbbVie’s U-turn shows its Shire deal was mostly about tax, after all. Despite initially holding firm as the Obama administration clamped down on tax-driven “inversions,” the American group has now cooled on a $55 billion takeover of its Dublin-based peer. There’s an unwelcome read-across for AstraZeneca.

from Breakingviews:

Tax clampdown could deter half-baked pharma M&A

By Neil Unmack and Robert Cyran

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The U.S. clampdown on tax-driven cross-border M&A should deter half-baked pharma deals. Some U.S.-led transactions, like AbbVie’s recent agreement to buy UK-based Shire, may survive on strategic logic. But pure tax-avoiding combinations look tricky.

from Breakingviews:

Bayer’s plastic float sows seeds for one more sale

By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Bayer’s plastic float could sow the seeds for another sale. Investors added more than $5 billion to the German blue-chip’s $114 billion market capitalisation on Sept. 18, after it unveiled plans to float MaterialScience, its capital-intensive plastics and polymers business. Once again, investors are rewarding a company for adopting a sharper focus. A logical follow-up for Bayer Chief Executive Marijn Dekkers would be to quit agrochemicals and create a pure healthcare business.

from Breakingviews:

Roche’s $8 bln bet outsmarts ice-bucket challenge

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Roche’s latest $8 billion bet may outsmart the ice-bucket challenge. Dumping cold water on heads, the social-media phenomenon now boosting research on Lou Gehrig’s disease or amyotrophic lateral sclerosis (ALS), is a great way to raise charitable cash. But the drug made by Roche’s target, InterMune, treats an obscure yet equally fatal disease with more sufferers.

from Breakingviews:

IPO exuberance ensnares Deutsche, Wells Fargo

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

IPO exuberance has ensnared Deutsche Bank and Wells Fargo. The two banks nixed a biotech deal last week - six days after it started trading. Their reasoning looks defensible, but their due diligence beforehand less so.

from Breakingviews:

Inversions start to spin out of control

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Inversions are starting to spin out of control. A quest for tax savings has made digestible overseas targets attractive to U.S. buyers. Hospira’s potential $5 bln deal for a Danone unit highlights a fresh supply, for so-called “spinversions.” The odd combination also reflects the perverse incentives distorting corporate decisions.

from Breakingviews:

Allergan bosses put money where their mouths are

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Allergan bosses have put money where their mouths are. The drugmaker says it is worth more on its own than the $52 billion hostile suitor Valeant Pharmaceuticals International is offering. That’s straight from the empty-promise, takeover-defense playbook. Allergan, however, is linking stock and option grants to lofty profit goals. It’s a bolder gambit that should become an M&A norm.

from Breakingviews:

Tax-arbitrage M&A requires a deep discount

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.  

Tax-arbitrage M&A requires a deep discount. U.S. companies seeking to relocate by mergers in a bid to slash how much they remit to Uncle Sam were a big part of the $1.8 trillion first-half deal boom. The benefits of such ill-conceived combinations will be fleeting, though. The more so-called inversions there are, the more likely the law is to change.

from Breakingviews:

M&A shows symptoms of overheating

By Robert Cyran and Kevin Allison

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The merger market is showing symptoms of overheating. Global deal volume is up sharply this year – up 63 percent according to Bernstein research and 71 percent by Thomson Reuters’ tally. Monday’s announcements, meanwhile, hint at toppiness.

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