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from Breakingviews:

Valeant can boost its $47 bln bid for Allergan

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

Valeant Pharmaceuticals has plenty of room to boost its bid for Allergan. The acquisition machine, working with hedge fund manager Bill Ackman, thinks it can cut at least $2.7 billion of costs from the Botox maker. At Valeant’s single-digit tax rate, that’s worth nearly $25 billion. And the potential benefits go on from there. The $47 billion deal, based on Monday’s closing price for Valeant stock, would still add up with a much bigger premium.

Valeant’s strategy of buying smaller pharma companies and cast-off assets has paid off for investors, with its stock up about 10-fold since the M&A binge began in 2008. The thinking is that many drug makers spend too much on overhead and research and development. Valeant slashes costs after buying assets and, with its low tax rate, can achieve higher net margins than most of its peers.

The tax rate or R&D expenses could eventually rise, of course, and the company isn’t immune to the occasional clunker of a deal. So far, however, it’s making a hefty profit, with analysts expecting net income to equal about one-third of revenue over the next year. That’s a margin almost 10 percentage points bigger than the number-crunchers are projecting for Allergan.

from Breakingviews:

Dawn raid makes comeback via activist drone strike

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By Robert Cyran and Richard Beales
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Remember the dawn raid, when a would-be acquirer built up a stake before the target realized it was under attack? Activist investor Bill Ackman has come up with a kind of drone strike version. His Pershing Square Capital Management hedge fund and Valeant Pharmaceuticals have teamed up to grab a potential 9.7 percent stake in Allergan, with a hostile takeover by Valeant ready for deployment.

from Breakingviews:

From Ally to Zoe’s, IPOs hint at back to basics

By Robert Cyran

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

From Ally Financial to Zoe’s Kitchen, initial public offerings may be getting back to basics. Investors had an appetite for almost any new issue until last week. Six of 10 offerings couldn’t fetch the desired price and six were yanked as fear again mingled with greed. A fresh crop of eager sellers, including Moelis and Weibo, may encounter a more rational market than expected.

from Breakingviews:

Ranbaxy sale shows risk in Japanese M&A adventures

By Peter Thal Larsen

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

Daiichi Sankyo has just reminded corporate Japan of the dangers of overseas adventures. The drugmaker is handing control of its ailing Indian affiliate Ranbaxy to local rival Sun Pharmaceutical in a $3.2 billion deal. The investment has lost almost 40 percent of its value in six years.

from Breakingviews:

Quitting tobacco, CVS has a Don Draper moment

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

 

CVS Caremark just had a Don Draper moment. Like the television protagonist from “Mad Men,” the second-largest U.S. drugstore chain has orchestrated a public relations splash by pulling tobacco products from the shelves at its 7,600 stores. The move will cost shareholders 17 cents a share, but the healthcare bona fides it can gain with customers against rivals like Walgreen may offset the hit.

from Breakingviews:

Bayer can pay more for cancer blockbuster partner

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By Olaf Storbeck

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

Bayer can pay more for Algeta. After a leak, the German pharma and plastics giant has admitted making a 336-crown-a-share, or 1.8 billion euro ($2.4 billion), takeover overture to its Norwegian partner. Shares in the smaller firm promptly rose above Bayer’s proposal. That looks appropriate: this opening gambit is not overly generous. Algeta’s flagship prostate cancer treatment, Xofigo, is promising. And the technology pioneered here could be used to treat other cancers.

from Breakingviews:

Shire adds to premium valuation with toppy deal

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By Neil Unmack

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

Markets must like Shire’s boldness. Shares of the UK pharmaceutical firm jumped almost 4 percent on the news it would acquire ViroPharma, even though it agreed to pay an eye-watering nine times this year’s sales for the biotech group.

from Alison Frankel:

Here’s what the government and judiciary think of serial whistleblowers

In a post earlier this week, I wrote about whistleblower lawyers' concerns that unsuspecting tipsters will be misled into signing up with one of the many non-lawyer groups advertising on the Internet for Dodd-Frank whistleblowers. Unlike lawyers' websites, ads by non-lawyers aren't subject to state bar regulations. Nor are fee agreements between whistleblowers and non-lawyer agents. Lawyers who regularly represent tipsters told me that a proliferation of supposedly deceptive ads after the Securities and Exchange Commission implemented its whistleblower bounty program is one of the biggest problems in their business.

Repeat False Claims Act plaintiff Joseph Piacentile's group, Whistleblowers Against Fraud, long predates the SEC program and is certainly not deceptive in representing its legal expertise online. WAF's website says very clearly that the organization is composed not of lawyers but of former whistleblowers who want to "partner with our clients to develop the strongest case possible, recommend the right attorney for their case, and guide them through each phase of their case." (As for fees, WAF says it takes a percentage of the whistleblower's recovery but makes individual arrangements with each client.) Instead of legal advice, WAF sells its "experience and relationships," which it says "are invaluable in developing large, successful whistleblower actions." Government lawyers, the website says, have come to know and trust the (unidentified) principals of WAF, who have assisted the federal government and state authorities in recovering billions of dollars.

from Breakingviews:

Amgen investors gain from investment banker CEO

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

 

An investment banker as CEO may have some merits – at least Amgen shareholders should think so. The $84 billion biotech led by former Morgan Stanley merger specialist Bob Bradway last week made mincemeat out of the value arguments put up by its quarry, Onyx Pharmaceuticals, and its advisers at Centerview Partners.

from Breakingviews:

China price probes may be too much of a good thing

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By John Foley

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

China’s trustbusters have found their mojo. Last month, the National Development and Reform Commission fined six milk companies including Danone and Fonterra for fixing prices. Petroleum groups, telecom operators, banks and auto makers may be next to feel the heat. China needs stronger watchdogs, as long as what motivates them is a hunger for good, not a taste for glory.

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