Breakingviews

Deal junkie Valeant shoots up on $10 bln fix

February 23, 2015

The drugmaker’s pledge last year to focus on organic growth and debt reduction didn’t last long. Cost cuts and tax savings from buying Salix proved irresistible. What Valeant’s injecting isn’t clear. Salix’s numbers are fuzzy after it admitted pumping clients full of inventory.

Time Warner Cable’s deal risk goes down to wire

February 20, 2015

A $45 bln sale to larger rival Comcast hangs in regulatory balance. Time Warner Cable’s stock price implies a 40 pct chance of collapse. A Breakingviews calculator shows how longer odds of success might hurt investors. The lack of a break fee would add insult to injury.

Drinks can merger may yet get flattened

February 19, 2015

U.S. drinks can maker Ball agreed to pay 4.3 bln stg in cash for British rival Rexam. Ball also pledged to pay a chunky 302 mln stg fee if it is blocked. Rexam’s share price suggests the merger may still fall foul of trustbusters.

Fresh flames rise from Sealy’s ever-burning bed

February 17, 2015

Uppity investor H Partners, alleging serial underperformance and stale private equity directors, wants Tempur Sealy’s CEO fired and a seat on the board. The company and the mattress industry have a torturous financial history. It probably means where there’s smoke, there’s fire.

Expedia indicates first-class M&A tickets remain

February 12, 2015

The online travel company’s shares jumped after it agreed to buy smaller rival Orbitz for $1.6 bln. Advertised synergies worth $525 mln today amount to twice the premium being paid. Despite evidence of fewer easy pickings, Expedia shows why the deal boom still has some runway.

Yahoo’s Alibaba spinoff attracts big discount

February 12, 2015

The company’s plan to distribute its stake in the Chinese company hasn’t excited investors. A Breakingviews calculator suggests they are attaching a 34 pct discount to the U.S. tech firm’s Alibaba shares – assuming Yahoo’s core business is worth something. That’s too cautious.

Pfizer’s generics injection lifts mood for breakup

February 5, 2015

The pharmaceutical giant’s $15 billion purchase of Hospira gives it a shot at reversing a history of value-destroying acquisitions. The injectable drug maker’s strength in non-branded medications should fortify Pfizer’s generics unit – and clear the way for spinning it off.

Smucker deal may keep activists in Kibbles ‘n Bits

February 4, 2015

The jam maker is gobbling Big Heart Pet Brands for $5.8 bln. Mixing coffee with dog food could create bargaining heft with stores but more likely will leave uppity investors hungry for a breakup. There’s a reason the one-time Nabisco division is caught in a cycle of spinoffs.

CRH’s $7.4 bln buy reveals M&A tolerance

February 2, 2015

It’s a big bet. The Irish building group will increase leverage – even with a big equity issue – to buy surplus assets from Lafarge worth a third of its market cap. CRH got sucked into an auction too. Yet investors cheered. It’s how things work in a low-return, low-growth world.

U.S. $16 bln paper deal requires precise folding

January 26, 2015

Rock-Tenn and MeadWestvaco shareholders will split their combined company evenly, with a balanced board. Investors are already inking in $300 mln of annual cuts, pushing both stocks up. Mergers that look equal, though, can still provoke business and cultural upheaval.