M & A wrap: Owners, insiders jockey ahead of LME sale
Market parties are jockeying ahead of a sale of the London Metal Exchange (LME), a deal that could radically alter the sway that banks and brokers hold over the world’s largest metals market.
Meanwhile, London Stock Exchange chief Xavier Rolet says he aims to put last year’s failed bid for Canada’s TMX Group behind him by forging ahead with plans to diversify.
Eastman Chemical is buying specialty chemical maker Solutia Inc for about $3.38 billion in cash and stock to extend its reach in emerging markets, particularly the Asia-Pacific region.
In a punishing year for hedge funds, the world’s biggest hedge fund is also one of the best performers, DealBook says. Bridgewater Associates, which manages nearly $120 billion, posted returns of 23 percent in 2011 — a year when the average hedge fund portfolio lost 5 percent, it added.
Roche Holding AG’s rivals Sanofi SA and Novartis AG see no need to match the Swiss drug maker in buying a gene-decoding business like Illumina Inc and reckon they can do partnerships instead.
It’s in the Genes
The market may be sickly, but Genentech investors are in that most rare place, holding a stock that is close to its lifetime high of just over $100 with a suitor repeatedly raising its bid for the company like it was 2006 all over again.
While Swiss drugmaker Roche says its latest official bid of $93 per share for the U.S. biotech, made last Friday, is fair, a source tells us they are prepared to go to $95, valuing the deal at $46.7 billion. Roche shareholders seem happy with the bidding so far, trading the shares higher today as the company talks to investors at its AGM.
Genentech would give Roche a big shot of lucrative cancer drugs and other medicines, including Avastin, which is approved to treat advanced colon, breast and lung cancers and is being tested for several other uses. And with Big Pharma marriages all the rage in ’09, Genentech investors must feel like the best natural selection in the market right now.
Deals of the Day:
* The parent of China Shipping Development may sell its LNG business with the parent of PetroChina to the listed vehicle, analysts said.
* China is reviewing Coca-Cola’s bid to acquire China Huiyuan Juice Group under the anti-monopoly law, Commerce Minister Chen Demin said on Tuesday.
* Santander, Spain’s biggest bank, bought out Tokio Marine Holdings’ stake in a jointly owned Brazilian insurance group for 678 million reais ($284.9 million), aiming to strengthen its position in Brazil.
Mum’s the word on Roche bid financing
At a time when many dealmakers want to prove their ability to fund an acquisition, Swiss drugmaker Roche Holding AG is staying mum on how it would pay for its bid to buy the rest of Genentech.
“At this point we would not give any details or further information on how we arrange the financing and where exactly we stand in the negotiating process,” Roche Chief Executive Severin Schwan told reporters. “I would like to reaffirm that we remain committed to the deal and we aim for a negotiated settlement.”
Earlier this month, Roche was in talks with a group of 10 to 15 banks regarding funding, but talks were characterized as “slow” by bankers close to the deal.
When Roche first made its $89 per share offer in July to buy the 44-percent of Genentech it does not already own, it cited the weak dollar as an attractive incentive. Since then, the more than 10 percent increase in the value of the U.S. dollar versus the Swiss franc has prompted some analysts to question whether the deal would be too costly.
Roche has said, however, the currency changes had not altered its willingness to do a deal. On Tuesday, when Roche reported its nine-month results, it said its strong cashflow in the U.S. was a natural hedge for the Genentech bid.
Genentech rejected the $89 per share offer, saying it undervalued the company. Shares of Genentech traded at $85.59, up $1.33, in midday trading on Tuesday. In a Reuters poll in August, the consensus of industry analysts was that Roche would have to hike its offer to about $107.50 per share, raising the cost of the deal to $53 billion from $43.7 billion.
Rodman & Renshaw analyst Christopher James said on Tuesday he saw $95 per share as a fair value for Genentech, and an acquisition premium would push the price “well above $100 per share.”
