Deals wrap: Walgreen prescribes drugstore.com buy
Walgreen plans to buy drugstore.com for $429 million, expanding the online presence of the world’s largest drugstore chain. Drugstore.com shareholders will receive $3.80 a share, which is more than double the company’s closing stock price on Wednesday.
A sale of the British government’s $107 billion stake in Lloyds Banking Group and RBS may start next year, Bloomberg said, citing four people familiar with the matter.
Geothermal energy is likely to attract interest as investors rethink the outlook for nuclear power following the crisis in Japan, writes Leonora Walet and Tessa Dunlop. Japan sits on enough untapped geothermal power to replace all of its planned nuclear stations over the next decade, but the quake-prone country’s only plan to harness that energy’s potential is to develop hot springs.
Cheap valuations along with their respectable free cash flow and extensive real estate assets have made discount and dollar stores attractive targets for companies and private equity firms, and it looks like Wall Street can wring a few billion dollars more out of them, writes NR Sethuraman.
Dutch navigation and digital map maker TomTom, which is struggling with competition from offerings by Google and Nokia, is not looking to sell its mapping unit, denying a report it might consider a sale. TomTom exec Taco Titulaer told Reuters “our content assets are core to our strategy and product offering”.
Judging by the activity in one Blackstone Group managed portfolio, wealthy investors are showing a healthy appetite for newly minted hedge fund managers, writes Svea Herbst-Bayliss. While the bulk of money raised by Blackstone for its Strategic Alliance Fund II comes from pension funds, central banks and other institutional investors, fresh demand from the ultra-rich investors provides fresh evidence of how the $1.9 trillion hedge fund industry is roaring back to life after the financial crisis.
Deals wrap: CVS’s $1.25 billion deal
Drugstore chain CVS Caremark agreed to buy Universal American’s Medicare prescription drug business for about $1.25 billion, doubling the size of CVS Caremark’s business that provides prescription drug coverage under the U.S. government’s Medicare Part D program.
Miner BHP Billiton’s acquisition strategy was back in the spotlight as market talk resurfaced it was looking at a $40 billion-plus bid for Anadarko Petroleum, although banking sources said they were unaware of any imminent offer.
Silicon Valley could see a modest return to the IPO market of prerecession days, writes NYT’s Evelyn M. Rusli.
VentureBeat’s Iris Kuo takes a look at green technologies worth watching in 2011.
DealZone Daily
Pfizer will present a nearly $4 billion offer for Germany’s Ratiopharm this week, sources tell Reuters, launching a possible bidding war with Teva Pharmaceutical and Actavis. A decision is unlikely before the end of the month.
Hedge fund Elliot Associates offers to buy Novell Inc — the world’s No. 2 maker of Linux — sending its shares up 28 percent. Speculation is that other bidders could come in and drive the price up further.
Britain’s Prudential seems to have stopped its decline after it announced a $35.5 billion takeover of AIA — the Asian life insurance business of AIG. The stock dropped a fifth since the Pru announced its offer, but it’s now bounced a percent or so.
For these deals stories — and all others — click here.
Plus, in other media:
Japanese carmaker Mitsubishi is in talks with France’s PSA Peugeot Citroen about extending an alliance but a capital tie-up is not on the agenda, La Tribune newspaper says.
Deals du Jour
Japanese firm Dainippon Sumitomo Pharma Co Ltd (4506.T) agrees a $2.7 billion to buy Sepracor Inc (SEPR.O). Dainippon will acquire a 1,000-strong sales force and drugs to treat insomnia and epilepsy from U.S.-based Sepracor.
Thermo Fisher Scientific (TMO.N) has agreed a 330 million euro purchase of German firm Brahms, a manufacturer of disease diagnosis tests. Thermo Fisher, which makes scientific instruments, said the deal would open up promising opportunities for commercialising new patents.
For more on this and the latest Reuters deals news, click here.
And here’s a round-up of deal-related stories from Thursday’s press:
* French IT services group Atos Origin (ATOS.PA) is in advanced talks to buy Italian electronic payment company SIA-SSB, La Tribune reported.
* The UK market regulator, the FSA, is stress-testing plans by banking group Lloyds (LLOY.L) to raise 10 billion pounds ($16.17 billion) and reduce its dependence on a state-backed toxic debt insurance scheme, the Daily Telegraph reported.
* Major shareholders of insurer RSA (RSA.L) would back plans by the company’s chief executive to raise $1 billion via a rights issue, the Daily Telegraph reported, citing some of the insurer’s largest institutional investors.
Nycomed crafts a buyout, 2009-style
Nycomed, the Swiss drug company, already has 4 billion euros or so of net debt and some pretty junky single-B credit ratings. But that’s not deterring the private-equity owned outfit from plotting a bid for the drugs business of Belgium’s Solvay, even in these leverage-phobic times. As I wrote earlier:
“Switzerland’s Nycomed plans to draw on buoyant junk bond markets and new cash from its private-equity owners to fund a buyout of Solvay’s drugs unit, people familiar with the matter said.
“Such a structure would allow Nycomed — which already has billions of euros of syndicated loans — to bypass the moribund leveraged loan market and would create a group with some 6 billion euros ($8.6 billion) in yearly sales.”
Nycomed has a few strong cards to play — a track record for integrating acquisitions and quickly paying down debt, owners ready to stump up a billion euros or so of fresh funds, and a solid case for being able to tap both Europe’s recently resurrected junk-bond market and its much larger U.S. counterpart.
And in preferring securities to bank debt, Nycomed is blazing a high-yield trail down a path already well-trodden by investment-grade peers such as Roche, whose buyout of Genentech was underpinned by $30 billion of bonds. Indeed some, including Reuters columnist Alex Smith, sense a “dramatic shift” underway in Europe as bonds fill a vacuum left by vanishing bank loans.
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
(Be)league(red) tables
Preliminary first-quarter data from Thomson Reuters on mergers and acquisitions (M&A) and capital markets are out. And unsurprisingly, spring has not sprung in investment banking, with the big exception of a record deluge of corporate bonds.
Fees across investment banking (M&A, loans, and debt and equity capital markets) halved, while fees for completed M&A topped that with a 68 percent fall. Overall announced M&A fell by a third, compared to the same period last year, to $444 billion.
And even that figure is flattered by two huge pharma deals, which bankers doubt will be followed by more of the same, and a flurry of bank bailouts.
Still, some houses will find reasons to be cheerful — Morgan Stanley, for example, which is no. 1 globally and in the United States, up from a dismal 10th a year earlier.
You can see a full round-down of previous quarters (and eventually of this quarter) here.
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.
A trigger for more drug deals?
Pfizer has taken the plunge, and others may follow.
The world’s largest drug maker is buying rival Wyeth for $68 billion in cash and stock to become even larger.
Pfizer’s Jeff Kindler is content with swallowing Wyeth for now. He told CNBC the company has no plans to do any huge transactions in the near future.
But the merger could trigger a wave of consolidation in the cash-rich sector as big pharma looks to diversify revenues in the face of competition from generic-drug rivals, analysts say.
The deal helps Pfizer cope with a major gap in revenue in 2011, when its blockbuster Lipitor cholesterol treatment will begin to face U.S. generic competition. It will also help it diversify into vaccines and injectable biologic medicines by adding Wyeth’s big-selling Prevnar vaccine for childhood infections and Enbrel rheumatoid arthritis treatment.
Pfizer would also realize major cost savings by streamlining areas that overlap.
Still the stakes are huge. Pfizer is taking on $22.5 billion of debt from a consortium of banks and cutting its dividend.
