(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.

The heroes who blow whistles when they see corporate malfeasance have long been underpaid. They take on tremendous personal and professional risk and far too few wind up being played by Russell Crowe on the big screen. So it feels good to applaud the $51.5 million windfall John Kopchinski is getting for his six-year legal battle with Pfizer, the world’s biggest pharmaceutical company, which resulted in a record $2.3 billion penalty for drug pushing transgressions.

Our reporter Bill Berkrot spoke with the former Pfizer sales representative and Gulf War veteran. You’ll be happy to know the news hasn’t gone to his head. Kopchinski celebrated by having a family portrait photograph taken. “We’re going to be staying right here in San Antonio in the same house, and my wife tells me when we go to the movies we’re still getting one tub of popcorn — the large tub,” he told Berkrot in a telephone interview.

It’s nice to know that people who have their hearts in the right place can earn as much as the bosses they stand up to.  While it’s always welcome to see people act out of altruism, perhaps the prospect of a big pay off might encourage more executives and employees to behave like better citizens.

(Picture: Russell Crowe (right) as a tobacco-company whistleblower in The Insider)

Attention cats and dogs: this deal affects you. 

Germany’s Boehringer Ingelheim is now the front-runner to buy certain animal health assets of Fort Dodge, which makes drugs like ProMeris, ProHeart 6 and the Duramune vaccine line, sources told Reuters. 

The assets are being sold by Wyeth to gain approval for its $68 billion merger with Pfizer. 

Wyeth is not selling its entire Fort Dodge business, just certain assets within the unit that are valued at roughly $400 million to $500 million, the sources said.  

Bidder Novartis has dropped out, while Bayer’s interest appears to be waning, the sources said. 

 The talks are yet another sign that animal health, long dismissed as a secondary business, is coming out of the doghouse. 

French drugmaker Sanofi-Aventis last week expanded its animal health business by buying the other half of Merial from its U.S. partner Merck for $4 billion in cash. The two firms also may create a pet and livestock joint venture that could be a leader in the $19 billion animal health market.

From Acquisitions Monthly

Pfizer, the world’s largest pharmaceuticals company, is lining up Turkey’s largest drugs company, Abdi Ibrahim, for a deal, according to an M&A banking source.

There are no talks so far, and what form a potential tie-up would take is not yet known.

Only last month the president of Pfizer’s emerging markets business unit revealed that the drugs company was considering new acquisitions.

“We see opportunities coming from the financial crisis… opportunities to build partnerships in emerging markets,”

Jean-Michel Haldon told Reuters in June. He did not give further details at the time, but under the stewardship of chairman and chief executive Jeff Kindler, Pfizer wants to add $3 billion in annual revenue by 2012 from emerging markets, which include China, Brazil and Turkey.

Family-owned Abdi Ibrahim – which is run by its president Nezih Barut and has annual sales of around $850 million – would certainly provide Pfizer with that additional source of income.
Turkey’s pharma market also remains hugely fragmented and is ripe for consolidation.  Abdi Ibrahim may be Turkey’s market leader, but it only has 7 percent of the country’s estimated $11 billion pharmaceutical market.  Hot on its heels are the likes of Novartis and Sanofi-Aventis.

The big multi-nationals are increasingly looking to the developing markets for growth as they face stiffer competition from generic drug makers, patent expiries, and a pressing need to reinvigorate their drug pipelines – all reasons why Pfizer bought Wyeth in January for $68 billion.  Pfizer’s best-selling anti-cholesterol drug Lipitor indeed expires in 2011. While a source close to Pfizer would neither confirm nor deny the company’s bid interest, Pfizer’s chief spokesperson Ray Kerins predictably would not comment on what he described as rumor. As for Abdi Ibrahim, all of its 2829 employees seem to have gone off on holiday.   “Welcome to Abdi Ibrahim,” said a corporate voice mail.  “Abdi Ibrahim’s headquarters will be closed from 6 to 20 July due to corporate summer vacation.”

As 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. 

* Orascom Telecom said on Monday it was proposing to extend the deadline to April 15 for implementing a court order for the Egyptian firm to sell its shares in mobile firm Mobinil to France Telecom.

Morgan Stanley’s jump from 10th to first in our M&A league table should put them on cloud nine. The first quarter was busy with drug deals, and Morgan Stanley was in on the biggies: advising Wyeth on its $64.5 billion acquisition by Pfizer, and Schering Plough on its $46 billion takeover by Merck. And with the ink still to arrive on the paper of both deals, more good stuff could be on the horizon. The trick for Morgan Stanley, and anyone wanting to take down the king of the hill, is to spot and exploit the trend.

If drug deals remain du jour — and many expect the sector to stay hot, despite all the swallowing going on — the trend will certainly be toward Biotech. The markets for biologics and pipeline-filling cancer treatments have been strong in the face of expected government action to lower doctor and drug bills.

The heightened merger activity in Big Pharma has switched the tables a bit in the sector. After Roche’s nearly $47 billion acquisition of Genentech, analysts became increasingly convinced that the remaining big biotechs like Celgene, Gilead, Genzyme, Biogen Idec and Amgen could emerge as buyers, given that traditional Big Pharma is either digesting deals or just not so big anymore.

Christopher Kaufman; DealZone Editor

Deals of the Day:

* Drug maker Lupin Ltd said it has acquired a 51 percent stake in Multicare Pharmaceuticals Philippines Inc, marking the Indian firm’s foray into the $2.5 billion Philippines pharmaceuticals market.

* Britain-based dairy products maker Dairy Crest said it had sold its 49 percent stake in Yoplait Dairy Crest (YDC) to the Yoplait Group for 63.5 million pounds ($92.66 million) and that it would use the cash to reduce debts.

* Austrian steelmaker Voestalpine said its North American unit, VAE Nortrak had acquired U.S-based Leading Enterprises Inc, a supplier of speciality components for railway tracks, as part of a plan by the company to expand its railway division.

(PHOTO: A sign is pictured on Wall St. near the New York Stock Exchange in New York November 25, 2008. REUTERS/Lucas Jackson )

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)

Morgan Stanley is bouncing back up in the global league tables for mergers advisory work after taking a hit to its rankings last year.

The investment bank has taken the No. 1 spot based on deal volume globally so far this year, according to latest Thomson Reuters data.

Morgan Stanley was one of the advisors, besides JP Morgan and Goldman Sachs, in the latest blockbuster pharma deal - the $41 billion offer for Schering-Plough by Merck. That came on top of its role as the advisor — along with Evercore — to Wyeth in the drug company’s $68 billion takeover by rival Pfizer.

The reversal of fortunes shows how a few big deals can shape M&A advisor rankings.

In 2008, Morgan Stanley missed out on the year’s largest transaction — the $113 billion spinoff of Philip Morris International. It also did not get league table credit for the second-largest — Belgian brewer InBev’s $60.4 billion purchase of Anheuser-Busch Cos.

As a result it slipped to No. 5 in worldwide M&A last year from the No. 2 spot it had held since 2005 behind Goldman Sachs, according to Thomson Reuters data.

(Photo: Undated handout image of cholesterol drug Zetia. REUTERS/Courtesy of Merck/Handout)

The drums of consolidation in Big Pharma were beating loudly after Pfizer bid for Wyeth in January. And as Merck and Schering-Plough were already teamed up on key drugs, the deal they announced this morning was hardly a shock. Though analysts said the pact has lots of logic to sell it — the companies are practically neighbors in New Jersey — the market is playing defense, so any excitement about Monday merger mania was quickly quashed as the economic Thorazine kicked in.

Long the preferred defensive play in a downturn, Big Pharma has been suffering along with the rest of the market as investors unwind the bull-market era and dump stocks for treasuries in the face of the biggest surge of new government debt issuance in living memory. Plus, consider that just last week the Obama administration was marshaling the president’s executive might to make good on a campaign pledge to tackle soaring health-care costs. Considering the environment, the strength of logic might not be enough to cast the Merck/Schering-Plough deal as anything other than a defensive necessity.

Shareholders are acting defensively as well. Merck shares were retreating in premarket trade, indicating a lack of confidence that the synergies of the merger will overcome what ails Wall Street.
Deals of the Day:

* Iceland’s financial watchdog said it had taken over investment bank Straumur Burdaras <STRB.IC>, the last major Icelandic bank left standing after the country’s financial collapse in October.

* Four global spirits makers, including Diageo, have shown interest in acquiring stake in India’s United Spirits, the world’s third-largest spirits maker, the Times of India said on Monday, quoting agencies.

* Swiss logistics group Kuehne & Nagel has agreed to buy J. Martens Holding AS, a Norwegian service provider to the oil and gas industry, it said.

* India’s Satyam Computer Services said it was commencing a competitive bidding process to select an investor to acquire 51 percent stake in the fraud-tainted outsourcer.

(PHOTO: A general view shows a logo on the Merck facility in Rahway, New Jersey November 28, 2005. REUTERS/Jeff Zelevansky)

Pfizer Inc’s $68 billion deal to buy Wyeth gave boutique investment banking firm Evercore Partners a huge jump in the rankings of merger advisers, while Lazard Ltd got left on the sidelines.

One mega-deal was enough to catapult Evercore, which advised Wyeth along with Morgan Stanley, into the list of Top 10 advisers. Evercore now stands at No. 7 for the global and U.S. rankings, up from No. 24 and No. 16 in 2008, according to data from Thomson Reuters.

Morgan Stanley stands at No. 2 globally with 15 deals, and No. 3 in the United States with 10 deals, according to Thomson Reuters.

Pfizer had an army of advisers that included Bank of America, Merrill Lynch, Goldman Sachs, JP Morgan, Barclays and Citigroup. Bank of America Merrill Lynch leads the global league tables, while Barclays Capital leads in the United States, according to Thomson Reuters.

One name missing from today’s news was Lazard, which has been Pfizer’s most active adviser going back to the early 1990s, according Thomson Reuters.

Lazard has advised Pfizer on 15 deals, including its $89 billion purchase of Warner-Lambert Co  in 1999 and $61 billion acquisition of Pharmacia Corp in 2002, the data showed.

Lazard did not immediately return calls seeking comment.