Breakingviews

AbbVie CEO may have overpaid again in $21 bln deal

March 5, 2015

Richard Gonzalez, the pharma firm’s boss, shelled out $1.6 bln last year to get out of a hard-won bid for Shire. Now he has come out on top in an intensely competitive biotech auction. AbbVie may get a blockbuster drug, but at a high cost: It must share profits with rival J&J.

Actavis sale dresses up barely investment grade

March 4, 2015

The acquisitive drugmaker attracted huge demand for $21 bln of bonds one notch above junk. They yield 1.75 percentage points over U.S. Treasuries, less than Verizon’s bigger, better-rated issue did in 2013. Buyers of top-tier debt can’t help but keep looking further downward.

Trust Citi to win from losing most profitable unit

March 3, 2015

The U.S. mega-bank has at last offloaded OneMain to rival Springleaf for $4.25 bln. The subprime unit’s 6.7 pct return on assets far exceeds anything else at Citi. And yet the deal provides a one-off income boost, frees up capital, accesses tax breaks and removes a distraction.

Hitachi’s $2 bln deal signals Italy open for M&A

February 24, 2015

The Japanese firm is buying Finmeccanica’s rail units. In Italy and across Europe, sales of high-end industrial assets to the Far East can be unpopular. But Hitachi is a credible buyer paying a full price. It helps too that the seller is eager to slim down and cut debt.

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.

Fresh flames rise from Sealy’s ever-burning bed

By Stephanie Rogan
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.

Michele Ferrero leaves $25 bln-plus Nutella empire

February 16, 2015

The confectioner has died at 89. Blessed with a gift for creating and marketing treats, he built Italy’s biggest fortune from hazelnut spread, Kinder Eggs and Tic Tacs. Stock markets and deals were both anathema. Rivals will hope his heirs eventually tire of independence.

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.