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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.

Valeant wants to buy Allergan and slash its spending. To gird against being swallowed by its acquisitive and cost-conscious pursuer, Allergan Chief Executive David Pyott this week gave his own company a taste of the same bitter medicine. He is cutting several early-stage drug programs and more than 10 percent of the workforce. Pyott reckons that should lift earnings, as the company measures them, from an expected $8 and change a share next year to about $10 in 2016.

Investors have come to expect, and often heavily discount, such rich promises from takeover targets. Executives generally use them either as a negotiating ploy or a way to cling to their jobs. Earlier this year, UK-based AstraZeneca made similar blustery claims about its sales growth potential, implying a wave of blockbusters would emerge from its unproductive labs. Though a tactical error by would-be buyer Pfizer ultimately undermined its $120 billion bid, its quarry’s optimistic forecasts were widely derided.

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.

from Breakingviews:

Valeant urges $54 bln deal with carrot, two sticks

By Robert Cyran

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

Valeant is pushing its $54 billion deal with the help of a carrot and two sticks. The pharmaceutical group raised its offer for Allergan again on Friday, on the condition that the board of its target cooperates. Meanwhile hedge fund boss Bill Ackman on Monday threatened to unseat six directors – and Valeant could yet decide to go fully hostile. But questions over Valeant’s own stock remain its biggest weakness.

from Breakingviews:

Glaxo wrestles with its past

By Neil Unmack

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

Investors keep taking hits on GlaxoSmithKline. The pharmaceutical group’s stock price has fallen nearly 10 percent in the last year on the back of weaker sales and bribery accusations in China. News of a criminal investigation in the United Kingdom knocked almost $2 billion of its market capitalisation on Wednesday morning.

from Breakingviews:

Failed bid would leave Astra under pressure

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

The likely failure of U.S. drugmaker Pfizer’s $119 billion bid for AstraZeneca, which was due to lapse on May 26, would leave the frustrated buyer no worse off. But the target has much to prove. Some of its shareholders welcomed a possible takeover - and could again.

from Breakingviews:

Astra-Pfizer needs a fresh start later in the year

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

AstraZeneca should not reengage with Pfizer in the dying days of the takeover timetable. Talks now would either be fruitless or delay a proper restart later.

from Breakingviews:

Loophole offers Pfizer risky way back into AZ deal

By Chris Hughes

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

Pfizer has a risky way back into a deal with AstraZeneca. An apparent loophole in Britain’s takeover code means the U.S. pharma group could offer the 58.85 pounds-a-share demanded by Astra for a recommendation, even after declaring that the earlier 55 pounds-a-share pitch was “final.”

from Breakingviews:

Where should AstraZeneca shares be trading?

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

Investors are putting a lot of faith in Pfizer succeeding in its $100 billion-plus quest to acquire UK pharmaceuticals rival AstraZeneca. The right price for the target’s share price can be seen as the weighted average of two possible outcomes – a sale to Pfizer or a standalone future. A new Breakingviews calculator shows why the market seems to think a transaction will probably happen.

from Breakingviews:

Pfizer unlikely to avoid China anti-trust therapy

By Ethan Bilby

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

The chance to vet Pfizer’s $106 billion offer for rival drug-maker AstraZeneca looks too good to pass up for China’s competition watchdog. Pfizer should brace for some antitrust therapy, though getting Astra’s board on-side first may help.

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