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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.

The bid battle for Cadbury in 2009 led to a reform of UK takeover rules. As a result, after its declaration of interest in Astra on April 28, Pfizer has to make a formal offer within 28 days - or withdraw for six months unless Astra agrees otherwise. The two sides are in stalemate. Pfizer is courting Astra shareholders and the UK government at the same time. Astra is waiting for a better offer than the 46.61 pounds a share proposal made in January. It is seeking to persuade shareholders – who would retain a stake in the enlarged company – that a deal would be risky.

Pfizer has one good reason to go hostile if Astra does not budge. Walking away would expose it to the risk that the U.S. government later changes its fiscal regime. Then Pfizer could no longer take advantage of the possibility to “invert” its tax domicile into the UK via the takeover.

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.

from Breakingviews:

Shire adds to premium valuation with toppy deal

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.

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