(Reuters) – Dell Inc (DELL.O: Quote, Profile, Research) said it received alternative proposals from Blackstone Group LP (BX.N: Quote, Profile, Research) and Carl Icahn that could be superior to the $24.4 billion offer from founder Michael Dell and private equity fund Silver Lake Partners last month.

Michael Dell is willing to explore the possibility of working with third parties regarding alternative offers, the company said on Monday.

However, Dell said the special board committee considering a sale continues to support the company’s pending sale to Michael Dell and Silver Lake Partners.

The committee was evaluating the new takeover proposals to decide whether either or both offers are likely to trump the existing take-private deal, Reuters reported on Sunday, quoting a source familiar with the discussions.

Icahn has offered $15 per share for 58 percent of Dell, while Blackstone has proposed paying more than $14.25 per share for the whole company. The Silver Lake group had agreed to buy all of Dell for $13.65 per share.

Dell’s shares were up 3 percent at $14.55 in premarket trading on Monday.

One issue for the special committee is how to compare the three proposals. Both Blackstone’s and Icahn’s proposals envision that a portion of Dell’s stock will remain publicly traded.

Silver Lake was not reachable for comment outside normal business hours in the United States.

The rival bids for Dell throw the future of the PC-maker into question. A “go-shop” period – during which the target company actively looks for rival offers – for a deal of this size rarely yields competing offers. The bids now could potentially turn the sale of Dell into a three-horse race, which could drag out for months.

It also could threaten the future of Michael Dell, who founded the technology giant at the age of 19 with just $1,000. Under the Silver Lake plan, he planned to contribute his roughly 16 percent share of Dell’s equity to the deal, along with cash from his investment firm MSD Capital, and to remain CEO of the company. Silver Lake is putting up $1.4 billion in the deal.

The Silver Lake group has no plans to increase or amend its offer until Dell’s special committee comes out with a ruling on the rival proposals, two sources close to the matter said late on Sunday. They said for now the buyout firm and Michael Dell planned to move forward with their current deal.

But the current plan to take the company private has come under attack from several high-profile Dell shareholders such as Southeastern Asset Management and T. Rowe Price.

The shareholders have said that his offer undervalues the company and pledged to vote against the deal, which requires a majority of shareholders, excluding the founder, to pass.

Brian Marshall, an analyst at ISI Group said in a report on Sunday that he did not expect the Silver Lake group to raise its offer meaningfully above the rival bids, “given significant challenges facing the PC business and a long transformation ahead.”

RIVAL BIDS

Under Icahn’s proposal, Dell shareholders will have a choice of electing cash or stock, but there would be a cap on the amount of cash they could get, the source said.

In other words, if all Dell shareholders chose to cash out, they could only sell 58 percent of their stock, retaining the other 42 percent that will remain publicly traded.

Icahn is being advised by investment bank Jefferies Group Inc. He plans to fund his bid with his own money, Dell’s cash as well as new debt.

The activist investor, who has taken a stake in Dell, earlier this month demanded Dell pay out $15.7 billion in special dividends. He is no longer asking for that, the source said.

Jefferies declined to comment on Sunday.

Blackstone recently hired Dell’s former vice president of corporate strategy, David Johnson.

Under Blackstone’s proposal, Dell also would have a certain amount of stock publicly traded. But unlike the Icahn proposal, Blackstone has proposed buying out any shareholder that wants to cash out of Dell.

Blackstone is being advised by Morgan Stanley (MS.N: Quote, Profile, Research), which has also given it a highly confident letter of financing, the source said.

Morgan Stanley declined to comment on Sunday.

There have also been some conversations about the Blackstone group selling Dell’s financial services business, but that is not part of the current proposal, the source said.

NEXT STEPS

Dell was regarded as a model of innovation as recently as the early 2000s, pioneering online ordering of custom-configured PCs and working closely with Asian component suppliers and manufacturers to assure rock-bottom production costs.

But as of 2012′s fourth quarter, Dell’s share of the global PC market had slipped to just above 10 percent from 12.5 percent a year earlier as its shipments tumbled 20 percent, according to research house IDC.

Michael Dell returned to the company as CEO in 2007 after a brief hiatus, but has been unable to engineer a turnaround thus far. Dell’s focus on corporate computing in recent years has yet to yield results, critics note.

Competing successfully against incumbents, including IBM (IBM.N: Quote, Profile, Research) and Hewlett-Packard (HPQ.N: Quote, Profile, Research), will not be easy no matter what the corporate structure.

A source earlier said that Dell had slashed its internal forecast for fiscal 2013 operating profit to about $3 billion – down sharply from the $3.7 billion it had predicted previously. The source added that more details will be revealed in a proxy filing which is expected by the end of this week.

Meanwhile, if the special committee of the board decides that either – or both – of the rival bids for Dell are reasonably likely to lead to superior offers, Icahn and Blackstone will have to present firm bids for Dell. The negotiations are likely to take weeks, the source said.

At that point, the special committee will again need to decide whether the firm bids from Icahn and Blackstone, which include features such as committed financing, were superior to the Silver Lake-Michael Dell agreement.

If they are superior, Silver Lake and Michael Dell will get one shot at revising their original bid. Unlike most other go-shop processes, where the original bidders get several chances to match rival bids, Dell has given its founder and Silver Lake the right to do so only once.

(Additional reporting by Nadia Damouni and Greg Roumeliotis in New York and Sayantani Ghosh in Bangalore; Editing by Theodore d’Afflisio and Stephen Coates)

(Reuters) – A special committee of Dell Inc’s board is evaluating separate takeover proposals from Blackstone Group and billionaire investor Carl Icahn to decide whether either or both are likely to trump an existing $24.4 billion take-private deal, a source familiar with the discussions said on Sunday.

Icahn and Blackstone put in preliminary bids late last week, potentially upsetting the plans of the No. 3 PC maker’s founder, Michael Dell, and private equity firm Silver Lake to take Dell private.

Dell could make an announcement as soon as Monday about whether either of the rival offers were reasonably likely to lead to a superior bid, the source familiar with the matter said. But the source warned that the special committee of the board may also decide to take longer to reach a decision.

Blackstone declined to comment. Dell and Icahn could not be immediately reached for comment.

The unexpected rival bids for Dell throw the future of the PC-maker into question. A “go-shop” period – during which the target company actively looks for rival offers – for a deal of this size rarely evokes competing offers. The bids now could potentially turn the sale of Dell into a three-horse race, which could drag out for months.

It also could threaten the future of Michael Dell, who founded the technology giant at the age of 19 with just $1,000. Under the Silver Lake plan, he planned to contribute his roughly 16 percent share of Dell’s equity to the deal, along with cash from his investment firm MSD Capital, and to remain CEO of the company.

Under Silver Lake and Michael Dell’s offer, Dell would be taken private for $13.65 per share. Silver Lake is putting up $1.4 billion in the deal.

But that plan has come under attack from several high-profile Dell shareholders such as Southeastern Asset Management and T. Rowe Price. The shareholders have said that his offer undervalues the company and pledged to vote against the deal, which requires a majority of shareholders, excluding the founder, to pass.

RIVAL BIDS

Icahn has offered $15 per share for 58 percent of Dell’s stock, the source said.

Under his proposal, the shareholders will have a choice of electing cash or stock, but there would be a cap on the amount of cash they could get, the source said. In other words, if all Dell shareholders chose to cash out, they could only sell 58 percent of their stock, retaining the other 42 percent that will remain publicly traded.

Icahn is being advised by investment bank Jefferies Group Inc. The activist investor, who has taken a stake in Dell, earlier this month demanded Dell pay out $15.7 billion in special dividends. He is no longer asking for that, the source said.

Icahn plans to fund his bid with his own money, Dell’s cash as well as new debt, the source said.

Jefferies declined to comment.

Blackstone, meanwhile, has offered to pay in excess of $14.25 per share for Dell, the source said. The New York-based alternative investment firm has not specified a range of the bid, but has two other equity partners – Francisco Partners and Insight Venture Partners.

Francisco and Insight could not be reached immediately for comment.

Under Blackstone’s proposal, Dell also would have a certain amount of stock publicly traded, the source said. But unlike the Icahn proposal, Blackstone has proposed buying out any shareholder that wants to cash out of Dell.

Instead, Blackstone is proposing to cap the amount of stock that would be outstanding in the publicly equity stub, the source said, adding that the private equity firm has not specified what that cap is.

Blackstone is being advised by Morgan Stanley, which has also given it a highly confident letter of financing, the source said.

Morgan Stanley declined to comment.

There have also been some conversations about the Blackstone group selling Dell’s financial services business, but that is not part of the current proposal, the source said.

NEXT STEPS

Dell was regarded as a model of innovation as recently as the early 2000s, pioneering online ordering of custom-configured PCs and working closely with Asian component suppliers and manufacturers to assure rock-bottom production costs.

But as of 2012′s fourth quarter, Dell’s share of the global PC market had slipped to just above 10 percent from 12.5 percent a year earlier as its shipments tumbled 20 percent, according to research house IDC.

Michael Dell returned to the company as CEO in 2007 after a brief hiatus, but has been unable to engineer a turnaround thus far. Dell’s focus on corporate computing in recent years has yet to yield results, critics note.

Competing successfully against incumbents, including IBM and Hewlett-Packard, will not be easy no matter what the corporate structure.

A source earlier said that Dell had slashed its internal forecast for fiscal 2013 operating profit to about $3 billion – down sharply from the $3.7 billion it had predicted previously. The source added that more details will be revealed in a proxy filing which is expected by the end of this week.

Meanwhile, if the special committee of the board decides that either – or both – of the rival bids for Dell are reasonably likely to lead to superior offers, Icahn and Blackstone will have to present firm bids for Dell. The negotiations are likely to take weeks, the source said.

At that point, the special committee will again need to decide whether the firm bids from Icahn and Blackstone, which include features such as committed financing, were superior to the Silver Lake-Michael Dell agreement.

If they are superior, Silver Lake and Michael Dell will get one shot at revising their original bid. Unlike most other go-shop processes, where the original bidders get several chances to match rival bids, Dell has given its founder and Silver Lake the right to do so only once.

(Reporting By Paritosh Bansal and Jessica Toonkel; Editing by Theodore d’Afflisio)

Pritzker, who was national co-chair of the president’s re-election campaign – Obama for America 2012 – said in a phone interview on Wednesday that the president had told her his top priority after the election was resolving the fiscal cliff problem – a $600 billion package of federal spending cuts and tax increases set to begin in January that could push the U.S. into a new recession.

“I think he will look for common ground, try to find a place where he thinks a deal can be made, and my guess is you will end up having to take this to the American people to have their influence on their legislators as well,” said Pritzker, who also heads private investment firm PSP Capital Partners and is an heiress to Chicago’s Pritzker family fortune.

“This is tough because you have people who have taken intransigent positions,” she said. “You have to find the middle ground here.”

Wall Street firms, corporate America and investors are focused on what will happen in January unless Congress agrees to cancel, alter or delay the cuts and tax increases. Such an agreement is expected to be tied to a long-term plan to cut the U.S. government’s budget deficit.

U.S. stock prices are likely to be hurt if the economy goes off the cliff and into a recession. On Wednesday, U.S. stocks dropped more than 2 percent in part on concerns about such a downturn.

The problem is expected to be the top priority of the “lame-duck” Congress that will convene soon.

Pritzker did not expect a major breakthrough before the end of the year.

“I don’t know how this will transpire. But probably you won’t have a comprehensive, complete, fully fleshed out deal between now and December 31,” she said. “No congressman I have talked to, no senator I have talked to expects that.”

“So my guess is this is a process, which could take six months or nine months or something. I just don’t know,” she said.

Pritzker’s range of business and charitable interests includes serving on the boards of Hyatt Hotels Corp and the Pritzker Foundation as well as starting businesses such as real estate investment firm Artemis Real Estate Partners.

She was the national finance chairman for Obama during his 2008 presidential bid but took on a smaller role in his re-election campaign. Media reports cited the president’s harsh criticism of the rich and his policies toward businesses as part of the reason for her pullback.

However, Pritzker said she spent election night with the president and other Obama supporters in Chicago.

When asked if she would consider a deeper involvement in the second Obama administration, Pritzker said she would be open to it. In 2008, she was seen as a candidate for the commerce secretary job but did not pursue that.

She declined to say whether she would consider that job now, but added, “I feel as though I have played a role in the first administration, and I will always be available to help the second administration.”

(Reporting By Paritosh Bansal; Editing by Martin Howell and Steve Orlofsky)

Pritzker, who was national co-chair of the president’s reelection campaign – Obama for America 2012 – said in a phone interview on Wednesday that the president had told her his top priority after the election was resolving the fiscal cliff problem. That is a reference to a package of federal spending cuts and tax increases set to begin in January that could push the U.S. into a new recession.

“I think he will look for common ground, try to find a place where he thinks a deal can be made,” said Pritzker, who also heads private investment firm PSP Capital Partners and is an heiress to Chicago’s Pritzker family fortune. “My guess is you will end up having to take this to the American people to have their influence on their legislators as well.”

“I know – because I have spoken with the president about it – his number one priority is to address the fiscal cliff and get to resolution,” she added.

“This is tough because you have people who have taken intransigent positions,” she said.

Wall Street firms, corporate America and investors are all focused on what will happen in January, when the $600 billion package of tax increases and spending cuts is scheduled to take effect, unless Congress agrees to cancel or delay them. Such an agreement is expected to be tied to a longer-term plan to cut the U.S. government’s budget deficit.

U.S. stock prices are likely to be hurt if the economy goes off the cliff and into a recession. On Wednesday, U.S. stocks, in part, dropped more than 2 percent on concerns about such a downturn.

The problem is expected to be the top priority of the “lame-duck” Congress that will convene soon.

Still, Pritzker said she did not expect a grand bargain between the Republicans and Democrats anytime soon.

“I don’t know how this will transpire. But probably you won’t have a comprehensive, complete, fully fleshed out deal between now and December 31,” she said. “No congressman I have talked to, no senator I have talked to expects that. So my guess is this is a process.”

Pritzker’s range of business and charitable interests includes serving on the boards of Hyatt Hotels Corp (H.N: Quote, Profile, Research, Stock Buzz) and the Pritzker Foundation as well as starting businesses such as real estate investment firm Artemis Real Estate Partners.

She was the national finance chairman for Obama during his 2008 presidential bid but took on a smaller role in his re-election campaign. Media reports cited the president’s harsh criticism of the rich and his policies toward businesses as part of the reason for her pullback.

However, Pritzker said she spent election night with the president and other Obama supporters in Chicago.

When asked if she would consider a deeper involvement in the second Obama administration, Pritzker said she would be open to taking a larger role. In 2008, she was seen as a candidate for the commerce secretary’s job but did not pursue that.

She declined to say whether she would consider that job now, but added, “I feel as though I have played a role in the first administration, and I will always be available to help the second administration.”

(Reporting By Paritosh Bansal; Editing by Martin Howell and Steve Orlofsky)

The initial, 25-page AEG information memorandum that describes the business but has no financial information was expected to go to “dozens” of potential buyers on Monday, the sources said. The initial group of recipients is expected to include rich individuals, rivals, sovereign wealth funds, real estate firms, and private equity firms, they said.

Anschutz is likely to start signing non-disclosure agreements and send out the books with financial details by the end of the month, the sources said.

The list of potential bidders includes trade buyers such as Liberty Media Corp (LMCA.O: Quote, Profile, Research, Stock Buzz); investment companies such as Guggenheim Partners LLC; private equity firms such as Thomas H. Lee Partners LP, Bain Capital LLC and Colony Capital LLC; and rich individuals such as Los Angeles biotech billionaire Patrick Soon-Shiong, sources have previously said.

Bidders are likely to need to come up with bids in the “high single digit, low double digit” billion dollars to proceed to the next round, the sources said, signaling that Anschutz has a higher price expectation than previously believed.

Sources close to potential buyers had said last month that the company could fetch between $6 billion and $8 billion in a sale.

“The Anschutz Co has no comment on the sales process beyond its press release announcing the sales process,” it said in a statement on Monday. As a private owner, the Denver-based billionaire has the final say in any deal.

Anschutz said last month that it was exploring a sale of AEG and had hired Blackstone Advisory Partners to advise it on the process.

AEG, which has around 25,000 employees, has developed more than 100 entertainment venues globally, in some of the world’s largest cities such as Los Angeles, London, Berlin and Shanghai. These include the Staples Center in Los Angeles, The O2 Arena in London and the Mercedes-Benz Arena in Shanghai.

The company also owns sports assets that include the Los Angeles Galaxy Major League Soccer team, possibly best-known for its star David Beckham, and a stake in the National Basketball Association’s Los Angeles Lakers.

The idea behind AEG broadly is to own the real estate and draw people to the venues through sporting events and live entertainment. Anschutz wants to keep the AEG platform in one piece because he believes the company’s holdings are more valuable as a group than in individual pieces, the sources said.

The price expectations and Anschutz’s insistence on keeping the platform and the management team in place, however, adds complexity to an eventual sale.

A buyer would need to write a large check for the company, including their own cash and bank financing, which could make it necessary for bidders to form consortiums.

There are no easy comparisons for potential buyers to draw on in valuing the company. What’s more, Anschutz will need to get approvals from sports organizations such as the National Hockey League and the National Basketball Association to be able to transfer ownership of sports teams.

A valuation analysis could eventually include a sum of the parts determination, the sources said. For example, one of the sources said, the Staples Center in Los Angeles alone could be worth around $1 billion.

Blackstone bankers are also planning to keep control of how bidding groups are formed, the sources said. The confidentiality agreement with potential buyers is expected to have a provision that will prevent parties from discussing joint bids.

The requirement is sometimes imposed by sellers in auctions to prevent bidders from forming groups as a way to undercut on price and possibly to help broker deals between bidders when the size of the asset is large.

Later on in the auction, possibly around the second round, the advisers also plan to launch a parallel process to seek approvals from the various sports leagues for the bidders, the sources said.

Blackstone bankers used a similar approach when they advised on the sale of the Los Angeles Dodgers baseball team earlier this year, which eventually sold for $2 billion to Guggenheim Baseball Management, a group that includes Los Angeles Lakers star Magic Johnson and one-time Hollywood studio executive Peter Guber.

In the Dodgers deal Johnson was the “face” of the consortium, a preference among sports leagues that usually insist on an individual rather than an institution buying the franchises.

Anschutz is likely to look to pair up the bidders in a similar manner as well, the sources said.

Blackstone declined to comment.

(Reporting By Nadia Damouni and Paritosh Bansal; Editing by Martin Howell and Jim Marshall)

Apollo Global Management LLC, Cerberus Capital Management LP, TPG Capital LP and Leonard Green & Partners LP are among firms that are conducting due diligence on Best Buy, as are Schulze and his financial advisers at Credit Suisse Group AG, several sources told Reuters.

At the same time, Schulze is negotiating individually with the private equity firms to iron out details such as how much of his roughly 20 percent stake in the company he would contribute in a bid, and what role he would play after a buyout, the sources said.

The idea is for Schulze then to bring the private equity firms together to form a consortium and submit a buyout proposal to Best Buy, according to the sources who declined to be identified because of the confidential nature of the discussions.

The process is still in the early stages and no decisions have been made yet, the sources said. One of the sources said the group is not likely to come together with any potential buyout proposal before mid-November.

But the start of due diligence and the negotiations between Schulze and the private equity firms show that Schulze’s plan to put together a consortium to buy the company is moving ahead, although he must still leap many hurdles to succeed.

Schulze has said he could buy Best Buy for $24 to $26 a share, valuing it between $8.16 billion to $8.84 billion, or up to $10.9 billion including debt, which would make it the year’s biggest leveraged buyout so far.

Best Buy shares closed at just under $17 on Tuesday, near four-year lows.

Credit Suisse declined to comment. Schulze, Best Buy and the private equity firms did not immediately respond to requests for comment.

Schulze, 71, was forced out as Best Buy chairman in June after an internal probe found he had not informed the board of allegations that former Chief Executive Brian Dunn was having an inappropriate relationship with a female employee.

The scandal came amid broader turmoil facing Best Buy, which is struggling in the face of competition from online and discount chains. Critics argue that the company has become a showroom for websites such as Amazon.com Inc, as shoppers go to Best Buy stores to check out electronics such as high-definition televisions but buy them elsewhere for less.

In August, the company suspended profit forecasts and share buybacks for the rest of the year to give its Chief Executive Hubert Joly, who joined the company last month, time to construct his own turnaround plan.

But Schulze instead proposed to put together a group to rescue the company he founded in 1966. After about a month of contentious negotiations with the Best Buy board, he agreed to make an offer to buy the company within a 60-day period or face a “standstill period” and stay his hand.

The private equity firms signed non-disclosure agreements sometime around mid-September, one of the sources said, but it was not clear precisely when the countdown would begin.

Schulze has said he plans to fund any deal through a combination of private equity financing, reinvestment of his own equity worth over $1.6 billion under such a deal, and debt financing with the help of Credit Suisse.

Schulze’s group can have up to six equity financing sources. It could not be immediately determined which other private equity firms might be engaged in the process.

MANY HURDLES

For a group eventually to come together, the private equity firms and Schulze will need to come up with a credible strategy to stop the bleeding at Best Buy and turn around its fortunes.

Some people close to the private equity firms said they remained skeptical of the prospects of a successful deal even as they continued to dwell into Best Buy’s confidential financial information, which they find of particular interest given their other retail investments.

Sales at Best Buy stores open at least 14 months fell 3.2 percent in the company’s fiscal second quarter ended August 4, the eighth decline in the last nine quarters.

Same-store sales were down 1.6 percent in the United States and 8.2 percent internationally. Best Buy owns Five Star, which has 204 stores in China.

Private equity could bet on international expansion in countries such as China, where consumers are still more inclined to visit shops to get their electronics, though such a strategy would be risky, a private equity source said.

Another factor that could help Schulze form a consortium is the familiarity of private equity firms with one another. Leonard Green and TPG have teamed up before on private equity investments, most recently buying Savers Inc, the largest privately held thrift store chain in North America.

A source familiar with the matter, however, said they had not yet agreed to team up again for Best Buy.

(Editing by Ken Wills)

(Reuters) – Global biotech merger volume has reached levels not seen in four years as big pharmaceutical companies pursue deals to get access to new drugs, with bankers saying therapeutic areas such as cancer, inflammation and autoimmune diseases are proving to be especially attractive.

Large pharmaceutical companies that have expired patents are looking for products to supplement their drug development efforts and sometimes to also give their primary-care sales forces more drugs to sell, according to healthcare bankers at Credit Suisse Group (CSGN.VX: Quote, Profile, Research, Stock Buzz).

“There seems to be a lot of interest in select oncology names, as well as the inflammatory and autoimmune spaces,” Charles Newton, head of biotech investment banking at Credit Suisse, said in an interview last week.

“While it is difficult to generalize across the industry, those are the key therapeutic areas where we see large pharma business development teams spending a lot of time,” he said.

Big drugmakers are facing one of the worst patent cliffs in history. They are also flush with cash and have easy access to debt, allowing them to make aggressive bids for promising biotech companies and other targets.

They have driven the volume of biotech M&A to more than $25 billion so far this year, compared with nearly $10 billion during the same period last year, according to Thomson Reuters data as of Thursday. The volume is the highest since 2008, when deal volumes surged to $54 billion due to Roche’s (ROG.VX: Quote, Profile, Research, Stock Buzz) $46.7 billion takeover of Genentech, the data shows.

“Their patents have expired, and as a result they have holes in their revenue line they are trying to fill,” said Scott Lindsay, global head of mergers and acquisitions at Credit Suisse. “The other part is just shoring up the pipeline they have. So even if they don’t have a major patent problem, they’re all looking for growth.”

Credit Suisse’s healthcare team advised on $16 billion of this year’s biotech deals, taking the top spot in the global rankings of deal advisers in the sector, the data shows.

The bank recently advised Human Genome Sciences (HGSI.O: Quote, Profile, Research, Stock Buzz) on its $3 billion sale to GlaxoSmithKline Plc (GSK.L: Quote, Profile, Research, Stock Buzz), and Amylin Pharmaceuticals Inc (AMLN.O: Quote, Profile, Research, Stock Buzz) on its $5.3 billion sale to Bristol-Myers Squibb Co (BMY.N: Quote, Profile, Research, Stock Buzz). Credit Suisse also advised Inhibitex on its $2.5 billion takeover by Bristol.

The past several months have seen a robust takeover appetite for hepatitis C drugmakers such as Inhibitex, and saw Pharmasset’s near $11 billion sale to Gilead Sciences Inc (GILD.O: Quote, Profile, Research, Stock Buzz). Regulatory filings showed that both Pharmasset and Inhibitex drew several other bidders in the auction processes, underscoring the interest in the makers of hepatitis C drugs.

Sometimes competition for these assets means that the buyers pay hefty premiums.

Bristol-Myers paid Amylin a 101 percent premium to the price before its interest was first reported. Bristol also paid a lofty 163 percent premium to Inhibitex. GSK’s $3 billion takeover was a 99 percent premium to Human Genome’s stock before its bid was first made public.

Inhibitex, Amylin and Human Genome Sciences are the three highest premiums paid for multibillion-dollar M&A transactions in the history of the biotech industry, Newton said.

“Some might ask whether targets are getting too expensive because of these premiums, but we don’t believe acquirers look exclusively through that lens as the premium paid is only one variable in the equation,” he added.

Big pharma’s preference for commercial-stage assets, rather than clinical trial-stage drugs carrying regulatory approval risk, means that companies tend to pursue multibillion-dollar transactions rather than going for smaller deals.

“Given the scale of large-cap pharmas, (deal size) becomes a factor at much higher numbers than it would in other industries,” Lindsay said.

(Reporting by Soyoung Kim and Paritosh Bansal in New York; Editing by Maureen Bavdek)

DeNunzio’s appointment comes after Steve Koch, who was
co-chairman of the M&A group, decided to retire to become the
deputy mayor of Chicago, effective Sept. 4.

Scott Lindsay, who was the other co-chairman of the M&A
group, was earlier named the global head of M&A.

DeNunzio, who was earlier vice chairman, will now be the
sole chairman of the group, according to the memo. He will
report to Jim Amine, global head of the Investment Banking
Department, and Lindsay.

A Credit Suisse spokesman confirmed the contents of the
memo.

DeNunzio, who has spent 23 years at the bank, has been
involved in deals across many sectors, including industrials,
energy, retail and consumer, and financial institutions.

He joined the M&A group of the First Boston Corp, the
predecessor firm to Credit Suisse, in 1989 after nine years at
Kidder, Peabody & Co.

His recent transactions include advising Goodrich on its
$16.5 billion sale to United Technologies Corp, and
Airgas Inc in a hostile bid by Air Products & Chemicals
Inc.

(Reuters) – The remnants of Washington Mutual Inc, the biggest U.S. bank to fail, has hired Blackstone Group LP (BX.N: Quote, Profile, Research, Stock Buzz) to advise it on how to grow — possibly in a business other than banking.

In an unusual step, WMI Holdings (WMIH.PK: Quote, Profile, Research, Stock Buzz), the parent company of the failed bank, is considering buying companies or starting businesses using a $125 million credit facility, “substantial cash” and advice from the Wall Street private equity company.

WMI has not decided what it would buy and the target may not be a financial services company, sources familiar with the situation said.

The idea is to find a good management team and a profitable operating business that can be grown, the sources said, adding that the process was still in the initial stages.

One attraction for the company is its net operating liabilities, or NOLs, which can be used to reduce the tax bill for a profitable business, the source said.

But for that WMI would have to be the buyer, as NOLs do not carry over if the company that holds them is acquired, the source said.

“It could create a lot of value to buy a business,” the source said.

Based in Seattle, Washington Mutual was 119 years old when regulators seized it on September 25, 2008, at the height of the financial crisis. With $307 billion in assets, it was one of the biggest corporate casualties of the crisis, alongside Lehman Brothers Holdings and Bear Sterns, and remains the largest U.S. bank or thrift to fail.

Regulators arranged the immediate sale of the main banking operations, known as WaMu, to JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) for $1.88 billion. Washington Mutual’s holding company filed for bankruptcy protection the next day.

The company exited bankruptcy in March, after nearly three and a half years of court battles. Blackstone had served as an adviser to the company during its Chapter 11 proceedings.

The assets of WMI Holdings include a unit that is winding down a Washington Mutual reinsurance business.

(Reporting By Jochelle Mendonca in Bangalore and Paritosh Bansal and Dan Wilchins in New York; Editing by Alwyn Scott, Bernard Orr and Phil Berlowitz)

A Reuters analysis of investors’ average cost found that six U.S. biotech companies flagged as potential takeover targets could yield billions of dollars in profits for their major shareholders at current share prices.

Ownership of these companies is dominated by a handful of institutional investors, such as Wellington Management, Fidelity Management & Research, Capital Group Cos and T Rowe Price Associates. They have seen the value of their holdings increase as takeover speculation drove up biotech shares, with the Nasdaq biotech index up about 29 percent this year.

Deals such as GlaxoSmithKline Plc’s $3 billion purchase of Human Genome Sciences Inc on Monday have fed that speculation and led to a 63 percent increase in U.S. biotech M&A volume so far this year, according to Thomson Reuters. Bankers predict the trend will continue, as demand for new drugs by big pharma drives the buying spree.

Despite the run up in share prices, the analysis shows a silver lining for potential acquirers. Investors already in the money may be more amenable to selling out of positions they have sometimes held for more than a decade.

To be sure, shareholder cost basis is only one data point for investors and acquirers to consider. A company’s existing drugs, pipeline, therapeutic area and an acquirer’s strategic needs would all play key roles in a deal.

But by estimating the average cost of holdings by major investors, the Reuters analysis sheds new light on deals that could lie ahead for the biotech sector.

“When investing in biotech stocks, I am not speculating that a big pharma company is going to come in and scoop it up,” said Rajiv Kaul, portfolio manager of Fidelity Investments’ Select Biotechnology Portfolio. “If I see value in a biotech stock, it’s possible a big pharma firm may see value in them as well.”

The Reuters analysis looked at eight U.S. biotech companies that Morningstar analysts had flagged as potential targets in 2012. The analysis also includes two other healthcare firms that were in play. The findings show that buyouts of six companies would unlock substantial gains for the shareholders.

The six are: Alexion Pharmaceuticals Inc, BioMarin Pharmaceutical Inc, Onyx Pharmaceuticals Inc, Regeneron Pharmaceuticals Inc, Seattle Genetics Inc and Vertex Pharmaceuticals Inc.

For example, Wellington, which has about $719 billion in client assets under management, has an estimated average cost of $1.46 per share in Regeneron as of March 31. Regeneron’s stock closed at $122.02 on Tuesday. Other major shareholders in the maker of eye drug Eylea are also substantially in the money.

The companies and investors either declined to comment or were not available for comment.

The analysis is based on the investors’ stock holding reports, going back to the earliest available disclosures with the U.S. Securities and Exchange Commission. It calculates the average cost, weighted by both the trading volume over each quarter and the shareholders’ own transactions over the years. The analysis looks at investors with at least 5 percent of the outstanding stock.

The estimate, which is based on data through March 31, can differ from the actual cost, especially if there are large swings in the share price in any quarter. That can happen in this sector as a result of events like clinical trial results. It can also change significantly from one quarter to the next.

For example, the analysis showed Sands Capital Management had 6.2 percent of Regeneron at an estimated cost of $78.44 per share, and 4.8 percent of Alexion at a cost of $42.28 per share. Sands Capital said on Monday that as of May 31, the firm held 6.7 percent of Regeneron at a cost of about $68 per share, and 5.2 percent of Alexion at a cost of around $37 per share.

But most shareholders tend not to disclose their actual costs, and bankers and investors say the method yields a good estimate. In the case of Amylin Pharmaceuticals Inc, which was bought last month by Bristol-Myers Squibb Co for $5.3 billion, or $31 per share, activist investor Carl Icahn had an average cost of about $23 per share, a source previously said. The analysis estimates his cost basis at $23.68.

PREMIUM POTENTIAL

Not all of the top biotech takeover candidates would reap a windfall for their shareholders. The biggest shareholders in two companies in Morningstar’s list – Exelixis Inc and Human Genome – have average costs higher than where the stock is currently trading.

Fidelity, T Rowe Price and Wellington, which together account for nearly 37 percent of the stock of Exelixis, which makes cancer drugs, are out of the money. Only Capital Research Global Investors, with nearly 6 percent, has a lower cost basis than the current share price, the analysis shows.

That could mean these shareholders may demand a high premium from potential bidders – a possible, albeit risky, bet for other investors looking to play the biotech sector.

Out-of-the-money holdings can deflect deals, too. Illumina Inc’s shareholders helped the life sciences company thwart a $6.7 billion, or $51 per share, takeover bid by Swiss drugmaker Roche Holding AG earlier this year.

Illumina’s second-largest shareholder, Baillie Gifford & Co – which sources have said pushed back against the bid – had an average cost of $60.54 per share, the analysis shows.

A high cost also is no guarantee that shareholders would fight a bid. Investors are at times willing to take a loss, especially if their view of the company is not sanguine.

In the case of Human Genome, for example, most of the top shareholders would have been in the red at $14.25 per share, the price at which GSK agreed to buy it.

Yet, Human Genome saw 126.5 million shares, or 63.5 percent of its entire float, change hands on April 19 alone, the day GSK’s initial $13 per share bid was revealed, indicating many long-term institutional investors exited the stock while arbitrageurs likely moved in en masse to bet on a deal.

One possible reason for the exit was the disappointment around the company’s lupus drug Benlysta, whose sales got off to a slow start. The company’s stock fell 69 percent last year.

“Despite the stock trading north of $25 last year, the investment thesis for most fundamental investors fell apart at the end of last year and it would be hard to justify the same price today,” said Ted Chen, an event-driven strategist at Jefferies. “They bought it with the expectation of one outcome. And that one outcome is not going to be feasible anymore.”

Still, GSK paid a multiple of 13.2 times Human Genome’s 2012 revenue, more than double the sector median of 6.2 times, according to ISI Group.

(Editing by Al Scott and Gunna Dickson)