Archive

Reuters blog archive

from Breakingviews:

Pfizer yet to land knockout blow on Astra

By Neil Unmack 

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

Pfizer’s courtship of AstraZeneca looks like a hate-hate relationship. In January, UK pharmaceuticals group AstraZeneca viewed its U.S. larger rival’s proposal of 46.61 pounds a share as too low on cash, too risky, and too cheap to even talk about. Pfizer’s latest proposal, an attempt to get Astra to begin friendly talks, hasn’t moved the needle much.

The U.S. company is now offering 50 pounds per share, 32 percent of which is in cash. Pfizer needs to find the right mix of cash and shares that allows it to preserve the tax benefits of relocating to the UK - which would require a minimum of 20 percent UK ownership of the combined group - whilst not diluting itself too heavily with the share component of the bid. The latest proposal would leave the UK ownership at 27 percent of the combined company, so there’s still room to up the cash.

The new price represents a mere 7 percent increase on the original offer – not a significant bump. True, it values Astra at a whopping 20 times forward earnings estimates, double the multiple it traded at a year ago. Yet it looks cheap to those shareholders who see Astra’s turnaround as well advanced, and its potential cancer immunotherapy pipeline as a blockbuster in waiting. Citigroup estimates that Astra could be worth 49 pounds per share on a standalone basis. Pfizer’s share of the synergies and tax benefits could be worth nearly 12 pounds a share, according to Berenberg. Some investors, who piled into the stock for its high income, will see 50 pounds as an unexpected windfall. But others will be antagonised. Astra’s board seems to be listening to them, and has rejected the offer.

from Breakingviews:

Astra has small tactical advantage over Pfizer

By Christopher Hughes and Neil Unmack
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Time often benefits bidders rather than targets – that’s why U.S.-based food group Kraft left Cadbury flailing for months after making a takeover approach for its UK competitor. But the dynamics of Pfizer’s interest in rival pharmaceuticals group AstraZeneca are unusual. Pfizer has good reason to seek a quick, agreed deal.

from Breakingviews:

Pfizer tax arbitrage will hasten more deals

By Robert Cyran

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

Pfizer’s $99 billion tax arbitrage bid will encourage copycats. The biggest charm of the U.S. drug giant’s offer for AstraZeneca of the UK lies in switching to a lower-tax domicile. The latest and largest such deal to hit the headlines raises the odds Congress will tighten rules – but not yet.

from Breakingviews:

Pfizer needs to do more to win AstraZeneca

By Neil Unmack

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

Pfizer will need to pile on more pressure if it wants to buy AstraZeneca. The U.S. pharma group has confirmed that it made a $99 billion cash-and-stock approach for its UK peer in January, and is now renewing its suit. Astra Chief Executive Pascal Soriot may ultimately struggle to resist a takeover, but he ought to be able to extract a better proposal.

from Breakingviews:

Valeant can boost its $47 bln bid for Allergan

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.

from Breakingviews:

Dawn raid makes comeback via activist drone strike

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

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

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.

  •