(Recasts lead)

If a deal can’t get done with the backing of Canada’s pension fund and capitalism’s mightiest bank, then the leveraged buyout market would truly be dead.

So it is with limited fanfare that DealZone welcomes the buyout of IMS Health by Canada’s public pension plan and Goldman Sachs as a sign of the market’s return to health. Green shoots in the LBO patch are hardly growing all jack-and-the-beanstalk, but putting together $4 billion for the prescription drug sales data provider is not just ice on the moon either.

Excluding debt, the $22-a-share cash deal is the biggest leveraged buyout since Bristol-Myers Squibb sold its ConvaTec unit to Avista Capital and Nordic Capital just over a year ago for $4.1 billion, according to data from Thomson Reuters.

Financing markets and general optimism have improved from the nadir of the crisis, and debt, if you can find it, is hardly expensive, with core rates at zero. But $4 billion pales in comparison with strategic deals in the health space this year, such as Wyeth’s $68 billion union with Pfizer.

It is safe to say, though, that had the IMS deal foundered, it would have been a far worse signal for LBOs than its success means for the relative health of the business.

Shares of Medarex soared after Bristol-Myers said it would pay $2.4 billion to acquire the company. Medarex is a biotech that since 2005 has been helping Bristol-Myers develop a promising treatment for melanoma. The deal packs a beefy 90 percent premium that we’re told makes sense, given the scarcity value of the company’s “transgenic” mouse technology. The mice are souped-up with human immune systems that are able to generate fully human antibodies that can be used as drugs.

The deal could help Bristol-Myers regain its stature as one of the world’s leading players in the oncology market, and help it develop treatments for immunologic conditions such as arthritis, lupus and psoriasis, Ransdell Pierson reports.

Smaller-cap biotech payoffs have been capturing a lot of attention of late. Human Genome Sciences showed just how exciting the sector can be. Positive data on its experimental lupus drug caught Wall Street by surprise and led its shares to nearly quadruple on Monday.

As Bill Berkrot reports, the surprising success earlier this year of Dendreon’s experimental cancer vaccine, FDA approval of AMAG Pharmaceuticals Inc’s iron replacement drug, and the Human Genome Sciences news may prove to be pivot points for small biotechs. Big pharma has clearly taken notice, and the biotech space this morning is looking like the lucky number for an M&A market that has been struggling to find its footing in the economic malaise.

A deal that just a couple of days ago was thought to have at least a 50-50 chance of being pulled off between Irish drugmaker Elan and Bristol-Myers Squibb turned out to be dead on the table after our drugs reporter Rans Pierson reported that talks between the two last month never got as far as price.

Elan markets multiple sclerosis drug Tysabri with Biogen Idec, which is holding a shareholder meeting today. While the soured prospects for that deal may be on investors’ minds, the issue will only come up briefly if at all, as the company has a much bigger ownership issue to deal with in the form of activist investor of Carl Icahn.

In his second proxy fight for board representation at Biogen, Icahn wants Biogen’s board to consider splitting the biotechnology company into one firm focused on neurology and another focused on cancer. Icahn also wants Biogen to examine its cost structure and improve its relationships with its partners.

Last year, Icahn lost a proxy fight against Biogen. He had accused the Cambridge, Massachusetts-based biotech of sabotaging its own announced attempt to find a buyer.

With just a few days left, the first quarter of 2009 has been as miserable for the U.S. IPO market as the last few quarters were.

The first three months of the year saw one solitary IPO- a grand slam to be sure, an $828 million (including over-allotments) deal by kids food maker Mead Johnson Nutrition. In contrast, the first quarter of 2008, when IPO flow was already starting to fall off a cliff, had 10 deals yield a total of $20.6 billion.

It was the second quarter in a row to see only one deal, the first time such a six-month drought has happened this decade.

(U.S. IPO investors might find some solace knowing things were even worse outside the U.S.- total IPO volume for the first quarter was $510.6 million on 41 deals, down from $15.4 billion from 150 deals in the first quarter of 2008, according to Thomson Reuters data. Ouch.)

But the Mead Johnson IPO was an anomaly: it was spun off by a well known company, Bristol Myers Squibb, and has robust sales in an industry considered relatively recession proof.

Part of the problem is that some companies are still in denial about how much their IPO can raise, leading them to wait for the better times that are taking a long while to get here.

Here’s what Tom Fox, the head of equity capital markets at UBS told Reuters: “With the markets off by 50 to 75 percent, depending on the sector, there’s a recalibration that has to take place. People have to get used to the levels at which stocks are trading and companies being valued at lower levels. That makes it more digestible to think about going out.”

And even with this week’s rally, the markets remain jumpy. The VIX volatility index is still above 40, far above the 20 range many bankers say is conducive to IPOs.

So his outlook is not very promising: “Our expectation is that the earliest we’ll see a more active IPO market is in the fourth quarter. And that presumes companies are ready to press the button in September or October. But it’s very likely we won’t see a truly active market until 2010.”

Sure enough, there were only three new IPO registrations during Q1 (and only one since the Mead Johnson deal), while 14 companies pulled themselves out of the pipeline.

But one of those new registrations, by Changyou.com, a Chinese online game company being spun off by Sohu.com, is set to price April 1. So it may well be that Q2 will see one deal. But maybe one deal only.

(PHOTO: Foreign tourists near Dakhla oasis in Egypt’s Western Desert, in Sept. 2008. REUTERS/Goran Tomasevic)

After eight months of playing hard to get, cancer drug maker Genentech has agreed to be bought by Roche for $95 per share — a price Roche didn’t think it would have to pay. The strength of the dollar makes the deal even more expensive for Switzerland-based Roche, but it may feel it got off easy, given talk that Genentech management might hold out for as much as $120 per share.

Following Pfizer’s bid for Wyeth and Merck’s offer for Schering-Plough, that makes nearly $160 billion in Big Pharma deals so far this year. The last two big U.S. pure pharma companies still unattached are Bristol-Myers Squibb and Eli Lilly. Both are probably feeling a bit lonely, particularly Bristol, which installed a dealmaker CEO a couple of years ago.

Bristol and Lilly, the grande dames of the industry, face increasing competition from generics and are struggling to keep their pipelines pumped up. They’ve been hunting for exciting biotechs and makers of hot new biologic drugs, preferably in cancer or another big disease market, as a matter of survival. Lilly already has some exposure here, having bought Erbitux maker ImClone last year for a far less exciting $6.5 billion.

Genentech’s demise leaves Amgen as the big biotech in the living room. At about $50 billion, it’s half the size of Genentech, but $10 billion bigger than Bristol Myers and worth $15 billion more than Lilly. There are plenty of smaller, potentially riskier biotechs out there, but maybe Not-So-Big Pharma will have to compete with bigger biotechs in the Darwinian drive for the next best drug.

Other Deals of the Day:

* Gilead Sciences agreed to acquire CV Therapeutics for $20.00 per share, in a transaction it said was valued at about $1.4 billion.

* Japanese non-life insurers Sompo Japan Insurance and NipponKoa Insurance plan to merge, an industry source said, in the second deal in less than two months in a sector struggling with slumping demand and a dwindling, ageing population.

* Asahi Breweries, Japan’s largest beer maker, said it has agreed to buy the Australian beverage business of British confectionery maker Cadbury for A$1.185 billion ($769.5 million).

* BMW reiterated that it has neither plans nor intention to take stake in General Motors Corp’s Opel business denying newspaper reports.

* British oil and gas company Valiant Petroleum said it agreed to buy Nor Energy (UK) Ltd, a unit of privately held Norwegian firm Nor Energy AS, raising its stake in the Causeway Field in UK North Sea to 24.5 percent.

* Japan’s Seiko Epson said it would start talks with Sony Corp on an alliance in the small- to mid-size LCD display business, including a possible transfer of some of Seiko Epson’s LCD assets to Sony. The companies said they aim to agree on a deal by June.

* Logistics firm Gati said it plans to acquire the remaining 26.28 percent stake in trucking company Kausar India Ltd.

* India’s fraud-hit Satyam Computer Services closes registrations for potential bidders on Thursday, kicking off a process to sell a majority stake in the company caught in the country’s biggest corporate scandal.

* The French government is mulling opening the share capital of Areva to Middle Eastern investment funds with a view to reinforcing its political influence and the nuclear group’s prospects in the region.

* Axsys Technologies, which manufactures defense surveillance and imaging systems, on Wednesday said it is evaluating a possible sale, confirming a Reuters story that sent the company’s stock up 37 percent.

(PHOTO: A customer shops for over-the-counter medicine at a Wal-Mart Supercenter in Rogers, Arkansas June 5, 2008. REUTERS/Jessica Rinaldi)

An IPO’s successful pricing hinges to some extent on the overall market’s performance that particular day, or so goes the thinking in the world of new issues.

The logic holds that on a bad day, the markets remind potential investors of the risks of a new offering and leads to a lower pricing, if the IPO prices at all.

But that might be overstating the case. During a road show, an IPO’s underwriters spend several days selling the deal to potential institutional investors who have time to take a close look at its particulars and prospects.

On Tuesday, O’Gara Group, a Cincinnati-based homeland security company, shelved its IPO, citing the usual “market conditions.” It hasn’t canceled it altogether, but the deal is off indefinitely.

The news came on a day the Dow Jones fell 3.79 percent, so it might be tempting to blame the market’s dive for the O’Gara deal’s woes.

But O’Gara was initially supposed to price its IPO last Tuesday, on the same day Mead Johnson, the pediatrics nutrition making offshoot of Bristol Myers Squibb, priced a $720 million IPO that exceeded all expectations. That day, the market was even tougher, falling 4.6 percent, so clearly investors were interested in a quality company even as the markets stumbled around it.

O’Gara, which ended up putting off its attempt to price its IPO until this week and lowering the estimated price range last week in a bid to entice investors, has suffered losses for several years and planned to use the proceeds to buy other companies, according to its SEC filing. Hardly a compelling story compared to Mead Johnson’s fat, growing sales.

Turns out an IPO’s chances for success has much more to do with a company’s fundamentals than the market’s vagaries on any given day.

If one didn’t know better, one could think all was all right in the world of IPOs right now.

Mead Johnson, the kids’ nutrition unit of pharma giant Bristol Myers Squibb, scored a home run with its IPO this week, raising $720 million and selling 5 million more shares than expected. The stock has enjoyed a strong debut, rising 10 percent in its debut Wednesday and putting on track to be the first double digit “pop” since fluid-handling systems specialist Colfax jumped 25 percent after its IPO in May 2008.

It’s the largest IPO in the United States since April and brings some measure of relief to fee-starved investment banks.

But it was only the second U.S. IPO in sixth months. And one home run won’t be enough to revive the IPO market.

There were three other IPOs set to price this week but all have been postponed from their original pricing date.

Changing World Technologies, a money-losing maker of diesel fuel from animal waste, was set to price Tuesday night but will give it another go Wednesday. And real estate investment trust Madison Square Capital and homeland security specialist O’Gara Group are now “day to day” after previously having set dates this week. Never a good sign.

Scarier still, beyond these three deals, there is not a single IPO on the calendar right now. There have already been 10 IPO withdrawals so far this year, on pace to match the 110 withdrawals in 2008, when the U.S. IPO market fell 43 percent.

It doesn’t look as the though IPO investors will be willing take a chance on any but the most solid new companies so long as the markets remain manic-depressive and a recession looms over almost all sectors.

(PHOTO: Traders and Mead Johnson executives at New York Stock Exchange awaiting company’s first trades, Feb. 11, 2009. REUTERS/Brendan McDermid)

(Thanks to reader Bob, who caught the timeline errors in our first entry)

Eli Lilly shareholders must have an itchy rash on their heads. Their management is set to pay a hefty $70 per share for cancer drug maker ImClone to rival a sweetened $62 per share bid from Bristol Myers that mercurial investor Carl Icahn has apparently whipped out. The mystery bidder has already completed due diligence and has the cash on hand to manage the deal. Analysts, generally unconvinced that this is a great strategic deal for Lilly. Shareholders could be less likely Lilly has a stomach for a bidding war if Bristol comes back. 

Icahn had called Bristol-Myers’ offer, which was increased by $2 per share, “absurd”, and ImClone says the unnamed suitor, who wants to remain shadowy until negotiations are over, does not need financing to put together the $6.1 billion-topping offer.

It seems fitting that the takeover of ImClone should be shrouded in intrigue. Founder Sam Waksal and his friend style icon Martha Stewart went to jail for lying to investigators over suspicious trading in its stock, and Carl Icahn brings his own mercurial blend of color and drama to the scene. One might find it poetic that the identity of this bidder is another stodgy old drug company rather than a media mogul, a style celeb or a flamboyant financier.

Deals of the day:

* British software firm Axon Group is dropping its recommendation of a takeover bid from India’s Infosys Technologies in favor of a higher offer from HCL Technologies , Axon said.

* Commonwealth Bank of Australia denied a media report that it had offered to buy the BankWest business of British bank HBOS, though analysts believed the banks could be in talks.

* Japan’s Fujitsu is in talks with Western Digital and others on the sale of its money-losing hard drive business, a company source said, in a deal one newspaper estimated could be worth $945 million.

* British advertising group WPP said its offer for British market researcher Taylor Nelson Sofres was final and would not be increased.

* Solar products maker Suntech Power said it formed a joint venture with MMA Renewable Ventures, forming Gemini Solar Development, and acquired EI Solutions, a California-based commercial solar system integration company. 

* Singapore-listed Thai Beverage said it is making an offer for the remaining 56 percent of Thai food firm Oishi at 37 baht per share, totaling 3.89 billion baht ($114.6 million).

* Australian zinc miner CBH Resources made another offer to buy rival Perilya, worth as much as A$60 million ($47 million), seeking to link up their nearby mines.

Following the standard corporate merger playbook, ImClone Systems and its chairman Carl Icahn have called Bristol-Myers Squibb’s $60 per-share takeover offer “inadequate.” Doesn’t it seem like just yesterday Bud brewer Anheuser-Busch was saying the same thing about InBev’s bid?

The two companies have strong links– Bristol already owns about 16.6 percent of ImClone and is seeking to buy the rest. Their relationship has been centered on Erbitux, a drug approved for colorectal and head and neck cancer in the United States and Canada. Now the relationship, like so many other M&A talks, looks like it could turn nasty. No mention of business dealings with Cuba yet, but stay tuned.

Carl Icahn has said he was disturbed that one of ImClone’s directors was also a Bristol designee, leading ImClone to look into whether Bristol got confidential information about the company. And now Bristol is claiming it has rights to Erbitux’s successor.

Across the Atlantic, another deal is also on the fast track to acrimony. Germany’s embattled Continental, which makes everything from tires to brakes, is trying to fend off unwanted advances from Schaeffler by seeking a white knight to save the company. Last week Schaeffler launched an $18 billion hostile takover bid.

*Other deals of the day:

** A back-office unit of India’s Essar Group has agreed to buy Los Angeles-based PeopleSupport Inc for about $250 million in an all-cash transaction, enabling the Indian firm to tap fast-growing new outsourcing markets.

** Spanish utility Gas Natural said it had agreed to sell 19.6 percent of its Argentine subsidiary to pharmaceutical group Chemo for $56 million.

** Swedish pharmaceutical firm Meda said it would buy a large chunk of American Valeant’s European operations for $392 million, boosting its presence in Britain and giving it an entry into Russia.

** Australian financial services firm AMP Ltd will pick up 29 percent in the infrastructure unit of construction firm Gayatri Projects Ltd,  the Indian firm said.

** British drugs retailer and wholesaler Alliance Boots announced its first foray into Latin America, saying it had agreed to buy a 25 percent stake in Brazilian pharmaceuticals wholesaler Athos Farma.

** British utility Centrica said it might revive plans to merge with British Energy  after French group EDF’s 12 billion pound ($23.6 billion) bid for the nuclear power firm stalled.

** Newmont Mining Corp <NEM.N> on Monday said it was considering strategic options, including a sale, for its 50 percent stake in Kalgoorlie Consolidated Gold Mines (KCGM), one of Australia’s largest gold mines.

(Corrects value of bid by Schaeffler to $18 billion.)