Breakingviews

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.

RBC’s foray south a pricey bet that two’s a charm

January 22, 2015

The Canadian bank is paying $5.4 bln for U.S. lender City National, a 26 pct premium that planned cost cuts don’t justify. The so-called banker to Hollywood stars is growing well. But RBC’s last venture into American retail banking was a mess. It needs to prove it can do better.

Old M&A dogs try old tricks with new activist fund

January 21, 2015

Former JPMorgan CFO Doug Braunstein and lawyer Jim Woolery have collected $250 mln and a CEO network to kick-start a fund to buy small stakes in companies and persuade them to do value-enhancing deals. The question is whether there’s room for permanently well-mannered activism.

Climate feels right for certain deals in Davos

January 20, 2015

The Swiss mountain air is crisp but the M&A market is hot. Fresh off a $3.5 trln year, bankers and CEOs have plenty to discuss at the World Economic Forum annual meeting. It’s less clear the atmosphere is conducive for the important political accords for which Davos is renowned.

Cheap oil lubricates Li Ka-shing’s corporate rejig

January 12, 2015

Asia’s richest man is shifting a 6 pct stake in Canada’s Husky Energy to his holding company as part of a broader shake-up. The move is vital to keeping Li’s grip on the telco-to-property empire. Though shareholders may object, the falling oil price has worked in their favour.

Shire gambles AbbVie break fee on risky $5 bln deal

January 12, 2015

The Dublin-based drugmaker is buying NPS to expand in lucrative rare drugs. The 51 pct premium is covered almost entirely by compensation from the collapse of Shire’s sale to U.S. peer AbbVie. That doesn’t much mitigate the risk of doing a deal ahead of a key regulatory ruling.

Dick’s buyout has financially sporting chance

January 8, 2015

The $6 bln U.S. golf-to-guns vendor is mulling a sale to private equity. Low debt at Dick’s Sporting Goods means even with a chunky premium, attractive returns look possible. It would, however, require healthy growth when stiff online competition is challenging many retailers.