Deals wrap: VW/Suzuki alliance shows strain
Volkswagen sought to allay Suzuki Motor’s concerns it might overstep its bounds in a multi-billion-dollar alliance and try to bring the Japanese carmaker under its control.
State-owned People’s Insurance Company of China Group, one of the country’s largest insurers, plans to raise $5 billion to $6 billion in an initial public offering in Hong Kong and Shanghai, IFR reported, citing two sources with knowledge of the plans.
“Quite a few people in biotech are still lapping up all sorts of short-sighted, destructive advice from the financial powers that be,” reports Xconomy.
Deals wrap: Valuing Facebook
Facebook has raised $500 million from Goldman Sachs and Russian Internet investment group Digital Sky Technologies in a deal valuing the social networking site at $50 billion, the New York Times reported, citing people involved in the transaction.
“Facebook doesn’t need to stay worth $50 billion forever — Goldman just needs to engineer an IPO valuation somewhere north of that, then exit quietly in the public markets,” writes Felix Salmon about the deal.
Italy’s Fiat set its sights on a majority stake in Chrysler after completing a long-planned demerger of its car-making activities from its truck and tractor business. Click here for a factbox on the demerger.
Expect M&A to drive biotech stocks in 2011, according to Money Morning.
from Breakingviews:
Genzyme shows how it can pressure Sanofi
Genzyme is showing how it can pressure Sanofi-Aventis. The U.S. biotech takeover target moved to unload its genetic-testing arm to Laboratory Corp on Monday for $925 million. The more Genzyme can do to fix itself up, the more likely it can squeeze its French suitor to sweeten its $18.5 billion takeover bid. Firms in the sector, once in play, almost always sell. A higher bid seems likely.
House-cleaning plans for the maker of rare-disease drugs are moving ahead. If Genzyme can fetch the same reasonable 2.5 times sales multiple for two other businesses it is shopping as it did from its genetic testing division, Genzyme will reap a total of about $1.3 billion. That's small beer, but all three units have been a management distraction. Last year, their combined operating margin was slightly negative.
Selling them off makes Genzyme more attractive. Moreover, they allow the top brass to focus on developing what looks to be a blockbuster drug for multiple sclerosis and fixing the firm's ongoing manufacturing problems, which would maximize value.
How much is a spruced-up Genzyme worth? The company's four big, profitable rivals are valued at 3.7 times estimated sales for 2011. Put Genzyme's remaining businesses on a similar multiple and it is worth about $18.5 billion -- in other words, exactly the same as Sanofi's bid. Genzyme had been trading at a discount because of its problems. So while Sanofi's 38 percent premium to Genzyme's undisturbed share price is in line with similarly sized biotech takeovers, it is tantamount to a nil premium offer if management can shape up the company. The sale of its genetic testing arm is a step in that direction.
Sanofi has effectively said it won't bid against itself. It probably will have to if it wants to claim its target. Genzyme's shares already trade a little over the offer price of $69 apiece. The longer Sanofi waits, the more progress Genzyme is apt to make on its own. Although no white knight has emerged, Genzyme's chances of being sold are high. Of the past 10 healthcare companies to receive unsolicited bids of more than $1 billion, nine have eventually been sold, according to Leerink Swann research. Genzyme's investors have time on their side.
Deals du Jour
U.S. network equipment maker Cisco systems offers to buy Norwegian video-conferencing equipment maker Tandberg ASA for $3 billion in cash. The offer price of NOK 153.5 per share represents a premium of 11 percent to Tandberg’s closing price on Wednesday.
Sanofi-Aventis (SASY.PA) says it has acquired privately-held Fovea, a privately-held firm specialised in eye diseases, for up to 370 million euros.
For these stories and more deals-related news from Reuters, click here.
And here’s what we found in Thursday’s papers:
* ViaSat Inc (VSAT.O), which provides satellite and other wireless networking systems, has agreed to buy Wild Blue Communications Inc for more than $565 million, the Wall Street Journal reports. The deal is a combination of $440 million in cash and $125 million in new Viasat shares. Wild Blue is owned by Liberty Media Corp (LINTA.O).
* British Airways (BAY.L) has a chance of finalising its proposed merger with Iberia (IBLA.MC) by the end of the year and is also keen to make an offer for BMI, BA Chief Executive Willie Walsh told the Financial Times.
* Hershey Co (HSY.N) “remains stymied” in its ability to assemble a takeover offer for Cadbury Plc (CBRY.L), leaving Kraft Food Inc (KFT.N) as the sole bidder for the British confectioner, the Wall Street Journal reports.
Is Genentech taking over Roche?
Roche’s megabucks Genentech buy is looking more like a reverse takeover — in some ways, at least.
The Swiss drugmaker splashed out $47 billion to buy out its biotech partner to secure access to Genentech’s impressive new drugs. But Roche’s U.S. operations are to operate under the Genentech name and research, development and commercial operations are all being based at the U.S. group’s South San Francisco headquarters.
Now Roche doesn’t even consider itself Big Pharma. It says it will leave the industry group Pharmaceuticals Research and Manufacturers of America (PhRMA) but will retain Genentech’s membership of the Biotechnology Industry Organization (BIO).
“As part of the world’s largest biotechnology company, Genentech and Roche believe that BIO’s purpose is closely aligned with the direction of the new company and, therefore, can represent the company’s interests in Washington, among policymakers, legislators and the general public,” Roche said in a statement.
PHOTO CREDIT: People are reflected in a window (R) as they walk past the headquarters of Swiss pharmaceutical company Roche in Basel February 4, 2009. REUTERS/Christian Hartmann
Please tell me what happened to my DNA stock? It just disappeared out of my portfolio. How much was I paid per share and where did the money go? Janice NIchols
Roche basks in Genentech defence
It wasn’t quite the market response Genentech CEO Arthur Levinson was looking for.
Levinson and his team worked hard to make the bull case for the biotech group by providing long-term forecasts to prove it is worth far more than Roche is willing to pay. Yet Genentech shares still ended down 4.6 percent, or nearly $4, in line with a grim market on March 2.
Roche investors, by contrast, were in distinctly chipper mood on March 3, marking up the Swiss group’s stock by more than 5 percent.
Why the skewed response? JP Morgan analysts put it down to the fact that positive news for Genentech is also good for Roche (after all, it already owns 56 percent of the U.S. business) and such news could actually have a bigger impact on the Swiss group because it trades on a much lower multiple.
“Most factors cited by Genentech to highlight the value of the business represent an even greater upside to Roche shareholders, as that upside could be leveraged outside the U.S. and should boost what is currently a much lower Roche valuation,” the brokerage’s analysts adds.
Hard ball from Basel
In the battle for control of the world’s most valuable biotech company, Roche CEO Severin Schwan is playing hard ball. The reason is simple: he needs to clinch a deal that clearly enhances earnings.
The Swiss drugmaker has been the most highly rated Big Pharma company for years but financial results last week suggest it may be losing its mojo. Certainly, its premium rating is slipping.
Genentech had wanted $112 a share but Roche’s tender offer for the 44 percent of Genentech it doesn’t already own actually cuts the price to $86.50, or about $42 billion, from the $89 proposed last July.
The coming weeks promise plenty of argument about the true value of Genentech. In particular, the market and clinicians are awaiting results from a trial of blockbuster drug Avastin in colon cancer patients who have had their tumours removed through surgery.
Success would greatly expand Avastin sales, but the jury is out on how well Avastin will work in this setting. Roche sees a 55 percent chance of success; Genentech puts the odds at 61 percent.
Bye-bye cool tickers? DNA and BUD head for bin
Pity the guys who dreamt up two of Wall Street’s coolest tickers — DNA and BUD — both of which look set to be consigned to the dustbin of history.
Genentech grabbed the three letters synonymous with biotechnology by being in on the ground floor of the gene revolution. Anheuser-Busch was lucky enough to have a beer brand known everywhere by one syllable. Now both look doomed.
Genentech faces a $43.7 billion bid from Roche for the 44 percent of the Californian biotech group that it doesn’t already own. Genentech is expected to succomb, albeit after a possibly sweetened offer. Anheuser has already agreed to a $52 billion takeover by InBev.
Their demise may take some of the fun out of stock trading – but investors shouldn’t despair. The thoughtful punter still has other options.
For example:
- BID for auctioneer Sotheby’s
V for visa is one that comes to mind. It has stood for victory in the past, as well as peace.. but in this case it will be vendetta when people see their credit card bills! but seriously BUD was subpar beer abd should go oob.
What goes around…
Lehman Brothers is looking for fresh capital in South Korea, the Wall Street Journal reports. If the investment bank does end up tapping South Korea, it will have taken slightly over a decade for the 1997 multibillion loan from the IMF, backed by Wall Street and the Federal Reserve, to come full circle. The Journal says Lehman is looking to state-run Korea Development Bank and Woori Financial Group as it searches for funds to ward off a Bear Stearnsian crisis of confidence. The IMF demanded strict economic reforms for its money. A South Korean lender, like the Chinese and Arab investors bailing out Citi and Merrill Lynch, might just want a juicier cut.
The best part of waking up is Folgers in your cup — with a side of Smuckers jelly. The maker of Jif peanut butter and Crisco oil said it would buy Folgers from Procter & Gamble for stock valued at $2.95 billion plus the assumption of $350 million in debt. J.M. Smucker & Co also acquired Jif and Crisco from P&G.
Yahoo set its annual shareholder meeting for Aug. 1 in the heart of Silicon Valley, as it braced for a proxy showdown with billionaire activist investor Carl Icahn. Earlier, The Wall Street Journal reported that Icahn would seek to remove Jerry Yang as Yahoo chief executive, citing the company’s failure to reach a merger or partnership deal with Microsoft. Icahn had proposed an alternate slate of directors for Yahoo’s board, but until now had not directly targeted Yang. “It’s no longer a mystery to me why Microsoft’s offer isn’t around,” the Journal quoted Icahn as saying. “How can Yahoo keep saying they’re willing to negotiate and sell the company on the one hand, while at the same time they’re completely sabotaging the process without telling anyone?”
Novartis has bought privately held biotech company Protez Pharmaceuticals in a deal worth up to $400 million, giving it rights to an antibiotic which could be used to fight superbugs. Protez has a broad-spectrum antibiotic given by injection that is currently in mid-stage Phase II development against drug-resistant infections, and Novartis hopes to submit it for regulatory approval in 2012. The Swiss group will pay $100 million immediately for the business, with a potential for up to $300 million of additional payments depending on the future success of the new drug with the catchy code name: PZ-601.
Corporate Express will open its books to U.S. office supplies retailer Staples, which has made an unsolicited bid for the Dutch office goods wholesaler, Het Financieele Dagblad reports. On Tuesday, Staples raised its offer to 9.15 euros a share, or 1.7 billion euros ($2.65 billion), on the condition that Corporate Express shareholders reject the company’s plan to buy privately owned French peer Lyreco. The paper added that Corporate Express will probably give a neutral recommendation to its shareholders about the bid.
Other deals of the day:
* Australia’s Warrnambool Cheese and Butter Factory said it and National Foods, owned by Japan’s Kirin Holdings, would jointly pursue a bid for Australian dairy producer Dairy Farmers.
Sanofi-Aventis says new drug pipeline is delivering
Marc Cluzel, head of research at French drugmaker Sanofi-Aventis, talks to Reuters’ Ben Hirschler about the outlook for the company’s pipeline of new drugs.
The group had a major setback last June when U.S. experts recommended against approving its weight-loss drug Acomplia, also known as Zimulti, because of worries it might give some patients suicidal thoughts.But Cluzel says there are other exciting drugs in development, with half a dozen new products set to be submitted to regulators for approval this year.
The company has been stepping up its deals with biotech recently, clinching a major tie-up with Regeneron and signing a cancer vaccine deal with Oxford BioMedica that some analysts believe might eventually lead to a takeover.
