DealZone

Another deal in healthcare: what’s the magic pill?

pillsAs dealmakers everywhere struggle to get deals done, the healthcare industry seals yet another one.

Express Scripts has agreed to buy health insurer WellPoint’s prescription business for $4.68 billion in a significant expansion for the U.S. pharmacy beenfit manager. The deal will be a concoction of cash and up to $1.4 billion in common stock, and will generate more than $1 billion of incremental EBITDA.

This comes on the heels of Pfizer’s $68 billion acquisition of Wyeth, Merck’s $41.1 billion takeover of Schering Plough and Roche Holding’s $46.8 billion buyout of Genentech. Granted, this isn’t a pharma deal, but it still falls under the umbrella of the healthcare sector.

And in a market where deals aren’t getting done — mainly due to tight credit conditions and partly due to value gaps between buyers and sellers (due to the huge declines in stocks late last year) — you’ve gotta ask: what’s the magic pill?

Deals of the day:

* Indian mid-sized IT outsourcer Tech Mahindra won a bidding auction for a majority stake in fraud-hit Satyam Computer Services Ltd, edging out Larsen & Toubro, seen by some analysts as the favourite bidder. 
    
* India’s Larsen & Toubro, which has built up a 12 percent stake in Satyam Computer Services, plans to hold on to the stake, its chief financial officer said on television channel NDTV Profit. 
    
* Pakistan’s Habib Bank Ltd. (HBL) and MCB Bank are interested in buying the operations of Royal Bank of Scotland (RBS) in the South Asian nation, the two banks said in separate statements on Monday. 
    
* A bid by Japan’s Mitsubishi Rayon Co for unlisted British chemicals maker Lucite International has hit a hurdle in China where regulators have delayed the acquisition, two sources briefed on the matter said. 

Big car. Smaller and smaller offers.

HummerThe number of bidders for GM’s Hummer brand has narrowed down to three, with current offers ranging from $100 million to $200 million in cash, in addition to other commitments, sources told Reuters.

That would be a further comedown from what was already a comedown — investment bankers initially estimated that the iconic gas guzzler could fetch between $500 million and $750 million, considering it a distressed asset.

Last month, GM turned back a Kentucky industrialist with a lowball bid, who had also put together plans for new powertrain options for Hummer, including a hybrid version of the H3 that would double its fuel economy from the current 14-to-18 miles per gallon, a source said.

At home with each other

Pulte

The foundation for the first of what could be a wave of deals in the badly beaten up homebuilding sector may in some ways have been laid in industry conferences and other interactions between chief executives.

Centex Chief Executive Timothy Eller and Pulte’s Richard Dugas have known each other for a long time and the possibility of a transaction was not new, people familiar with the matter said. 

Eller and Dugas did not discuss any specific terms when they talked about a deal earlier, but when talks began in earnest some two months ago an agreement was reached fast, one of the sources said. 

The dealscape according to Stone Key Partners

dsc00328Two Wall Street veterans, former Bear Stearns investment bankers Denis Bovin and Michael Urfirer, officially launched Stone Key Partners today. The boutique investment banking firm, which has been operating under the radar for nearly a year, will focus on strategic advisory services, including M&A advice.

Stone Key, which has about a dozen people in all right now, plans to focus on technology, aerospace, defense, homeland security and information services. The firm made it to Thomson Reuters’ annual rankings for 2008 for advising on about $5.5 billion in M&A transactions. Bovin and Urfirer, who have worked together since 1994, have been involved in big deals such as Finmeccanica’s $5.2 billion acquisition of DRS Technologies, among others.

Bovin, 61, and Urfirer, 49, are co-chairmen and co-CEOs of Stone Key. Dealzone caught up with the two of them for a Q&A:

In a spin

Financial public relations firms, who elevated the honing of corporate messages to a highly profitable art form, are having to adapt their businesses and in some cases cut staff as the economic gloom intensifies.

With far fewer deals to publicize and lucrative “retainer” contracts under pressure, companies are cutting costs and are increasingly focusing on work thrown up by the crisis, such as capital-raising, restructuring and repairing tarnished images.”

So what exactly are they up to?

Some recent pr industry blogs and other web postings shine a light on some of the spinmeisters’ latest tactics.

Thain, Lewis part ways

Thain and LewisJohn Thain’s out of the door as well. And one wonders if Ken Lewis could have saved himself a lot of heartache if only he had watched the action movie “Speed”.  

Sandra Bullock called it more than a decade ago. As her character says in the movie: You know, relationships that start under intense circumstances — they never last.

Thain’s departure leaves Lewis without several top executives at Merrill, which it acquired on Jan. 1 for $19.4 billion. Other top Merrill executives to recently leave include Robert McCann, who was to lead the combined brokerage, and investment banking chief Greg Fleming.

Goldman draws bailout critic’s ire

Goldman SachsFirst Bill Perkins likened the architects of the $700 billion U.S. bailout to communists. Now the Houston-based venture capitalist is going after the capitalists.

In his latest full-page ad in the New York Times, Perkins raises a question about the propriety of Goldman Sachs buying the majority of Constellation Energy’s London-based commodities business.

“Question #1: Does anyone else find it troubling that a government bailed out bank (Goldman Sachs) is buying a European Energy Speculation Outfit? It’s your money!!!”

Citi to keep Banamex

Citi logoCiti is keeping its Mexican banking unit Banamex. Sources told Reuters that Citi sees the Mexican bank as a solid business and has no plans to sell it.

In recent days, analysts and business columnists have speculated that leading businessmen in Mexico could be planning to buy Banamex as Citigroup tries to shed assets.

Telecommunications mogul Carlos Slim, the world’s second wealthiest man, was widely seen as a potential buyer, but his spokesman told Reuters on Friday that he was not in talks to acquire the bank.

Terminator IV, starring Chrysler

TerminatorChrysler’s got $4 billion in emergency aid from the U.S. government and has said it will seek another $3 billion in government loans. And yesterday it agreed to form an alliance with Italy’s Fiat as it looks for the road out of the woods.

(The Fiat deal fine print reportedly makes it conditional on Chrysler’s getting that extra U.S. loan.)

But the troubled auto maker is not letting its economic ails keep it from going to the movies.

Citi to sell assets. To whom?

Citigroup As Citi announced plans of a radical dismantling, CEO Vikram Pandit said he “will continue to look at all assets dispassionately.”

For some time to come, that might really be all that he can do when it comes to his plan to sell off non-core assets.

Citi said it will realign into two businesses, Citicorp and Citi Holdings, as it posted its fifth straight quarterly loss. Citicorp will focus on universal banking, the other on brokerage and retail asset management, local consumer finance, and a pool of assets that require special management.