Daily Briefing: Drug Deals

November 14, 2007

pills.jpg** Roche Holding AG‘s $3 billion bid to acquire Ventana Medical Systems turned a bit less hostile with the two sides striking a confidentiality agreement. Ventana says it still believes Roche’s $75-a-share takeover offer is “grossly inadequate” but said it hopes Roche could be encouraged to hike its offer if it sees the numbers. Some analysts have said Ventana could be worth up to $90 per share as a stand-alone business and Roche may have to raise its bid — possibly above $100 — to ensure success. Roche’s Franz Humer says you won’t find him anywhere near any bigger deals in Big Pharma. A monster acquisition stifles innovation, it destroys pipelines … let Franz count the ways.  

** The FT reports Morgan Stanley has taken a minority stake in Traxis Partners, the hedge fund group founded by outspoken former Morgan Stanley chief strategist Barton Biggs. It cites people close to the matter as saying Morgan Stanley bought less than 20 per cent of the $1.5 billion fund, which invests in equities, fixed-income, commodities and other securities around the world. Reuters was first to report the talks two months ago.
** Citigroup has moved to put out another fire sparked by its sagging share price, reworking a its $4.6 billion stock-swap deal with Japanese brokerage Nikko Cordial to make Nikko a wholly owned Citi unit. Citigroup also said it and Nikko had lowered the price at which the deal could be terminated.   
** Mizuho Financial said it would delay the merger of brokerage unit Mizuho Securities and affiliate Shinko Securities by four months after Mizuho subprime write-offs  forced Mizuho Securities to book a net loss in the first half. Mizuho holds about a 15 percent stake in Shinko. The deal, originally set for January, has been pushed back to May 7, and is set to create Japan’s fourth-largest brokerage in terms of assets under management.  
** South Korea’s SK Telecom is set to take a $1.1 billion controlling stake in broadband firm hanarotelecom. “There is a lot of relief in the market at the prospect that SK will finally acquire a landline and broadband provider,” said Jin Chang-hwan, an analyst for Goodmorning Shinhan Securities. 
** Ukrainian billionaire Gennadiy Bogolyubov has raised his offer for Australian manganese miner Consolidated Minerals to A$1.08 billion ($964 million). Bogolyubov’s private equity firm Palmary Enterprises increased its bid by 20 cents to A$4.70 a share, hoping to silence rival bidder Pallinghurst Resources. Consolidated’s board had already endorsed Palmary’s $4.50 offer over a matching bid from Pallinghurst, which is headed by ex-BHP Billiton chief Brian Gilbertson. 

** Triarc Cos, the restaurant chain led by activist investor Nelson Peltz, said in a filing on Tuesday it made an offer to buy hamburger chain Wendy’s International on Nov. 12, but at a lower price than the range it indicated in July. On July 30, Triarc said it would be prepared to offer between $37 and $41 a share for the hamburger chain. Sources familiar with the situation told Reuters on Monday that Wendy’s was expected to get tentative takeover offers and that Peltz would likely submit an offer by a Monday deadline.
** RWE, Germany’s largest power producer, postponed the sale of its American Water unit because of market turmoil and ditched an associated plan to return cash to shareholders. RWE said it did not expect to get an adequate value for the water company now, and was therefore dropping plans for a dividend payout and a share buyback. The stock tanked 6 percent on the news. RWE has not set a new date for the sale. 
** The WSJ’s Deal Journal looks at the  storm over Citigroup analyst Prashant Bhatia’s call on E*Trade Financial, focusing on how his suggestion of possible bankruptcy at the online brokerage contrasts with his competitors’ views. Of the 12 analysts that cover the company, eight have “hold” ratings on the stock, one now has a “sell” (Bhatia) and three have some form of a buy rating, according to Thomson Financial. “It will hurt the track record of their recommendations just as they come under the microscope for their year-end salary and performance reviews” the Deal Journal says. 
** Britain’s Northern Rock says it has won an injunction restricting publication of information contained in a memorandum sent to parties interested in acquiring the stricken mortgage bank. “Further speculative reporting based on the illustrative information in the memorandum may jeopardize the complex discussions and negotiations taking place in connection with its strategic review,” Northern Rock said in a statement. The memo was posted on the Financial Times newspaper’s Alphaville Web site.

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