(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.

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.

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 )

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.

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.

And the deal, which has a material adverse change clause, could falter if lenders lose confidence in Pfizer’s health. The transaction is expected to close at the end of the third quarter or during the fourth quarter.

DEALS OF THE DAY

** South Africa’s biggest consumer goods group, Tiger Brands, made a new approach to AVI about a potential offer for the company, and its smaller rival is considering the proposal.

** Norwegian gas shipper BW Gas Limited said it has agreed to buy four liquefied natural gas carriers from World Nordic SE for $720 million and will pay for the vessels by issuing new shares.

** Japanese soy sauce maker Kikkoman said U.S. drinks maker Coca-Cola Co was seeking a 50 percent stake in an unlisted Kikkoman subsidiary, Tone Coca-Cola Bottling Co.

** Danish insurer TrygVesta said it was in talks to buy small Swedish insurer Moderna.    

** Austrian steelmaker Voestalpine is eyeing two possible purchases of railway systems makers in the United States, Austrian newspaper WirtschaftsBlatt reported.

** U.S. drugmaker Wyeth has withdrawn from talks to take over Dutch biotechnology firm Crucell.

** Turkey’s Finansbank, a unit of Greece’s largest lender National Bank, said it had decided to sell its Malta subsidiary to another unit of NBG for 185 million euros ($240 million).

** Coal miner Polo Resources said it received an unsolicited offer approach from a private equity firm.

(Photo: Pfizer Chief Executive Jeff Kindler. REUTERS/Brendan McDermid)

Pfizer’s at it again. The world’s largest drugmaker by revenue has set its sights on rival Wyeth and the two are talking about a deal that could be valued at more than $60 billion, according to the Wall Street Journal.

Pfizer was built in the last 10 years on two of the biggest deals in the sector — the purchase of rivals Warner Lambert and Pharmacia.

And another big deal would not come as a surprise. Some analysts and investors have made pleas to the company to make another acquisition to obtain products to prepare for an expected loss in earnings in 2011, when the patent on its flagship cholesterol drug Lipitor expires.

But a deal may not be a panacea to its problems, and Chief Executive Jeff Kindler has said so in as many words.

“Business development — whether it is a small deal, a medium-sized deal or a large deal, is an enabler for strategies. It is not a strategy in and of itself,” he told Reuters Health Summit last November.

Kindler’s strategy to deal with Lipitor’s side effects: maximizing sales of current products, jump-starting sales in emerging markets, launching new medicines and cutting costs.

Now, apparently he is adding deal-making to the list.

DEALS OF THE DAY

** French banks Credit Agricole and Societe Generale have agreed in principle to a possible merger of their asset management divisions, financial paper l’Agefi reported.

** Germany’s Siemens plans to dispose of its 34 percent stake in the nuclear power plant unit of France’s Areva, Les Echos reported.

** Spanish construction and services firm ACS has received four bids for its port assets, which could fetch between 1.2 and 1.4 billion euros ($1.56-$1.82 billion), Expansion reported.

** The European Bank of Reconstruction and Development plans investments into Hungarian banks, focusing on OTP, which does not have a foreign parent bank, the EBRD chairman told Nepszabadsag.

** French state-controlled Banque Postale could seal a liquidity deal with Dexia to allow the Belgian-French financial services group to refinance itself on financial markets, French daily Les Echos reported.

** Hannover Re is buying a life insurance portfolio of ING Groep from Scottish Re to become the fifth-biggest individual life reinsurer in the United States.

** Swiss department store Jelmoli said it had settled litigation with Tivona in a deal that will see it pay 60 million Swiss francs ($52 million) and 80,000 shares to acquire a 55.5 percent stake in the real estate firm.

(Photo: A woman walks into the Pfizer headquarters in New York in a file photo. REUTERS/Jeff Christensen)

The best seat in the house for a healthcare dealmaker has to be across the table from Elan CEO Kelly Martin. With his stock price in a coma and his two most promising drugs locked up in joint ventures, it’s hard to see what kind of bargaining power the long-time Wall Street veteran can muster to sell the Irish drug maker at a price shareholders will be happy with. Investors seem to think a deal is possible, or at least that the prospect for a deal is better than the company turning the corner on its own. They bid up the stock 16 percent on news that Elan had hired Citigroup to strategically review the company. The stock has lost nearly 70 percent since mid-July. Though the company says a sale is not its preferred strategy, this is what M&A folk tend to mean when they say strategic review.

Generally, investors have had little reason to feel confident about Elan. It is not currently making any money, a common condition for biotechs, and has $1.7 billion in debt coming due within the next five years. Though there is M&A activity in the sector, Elan is looking particularly anemic. Last month, it said it would cut 114 jobs and close its Tokyo and New York offices. With a market cap around 3.2 billion euros ($4.3 billion) it’s hardly too big for a Pfizer, Merck or Wyeth to swallow. There were rumors that Pfizer was sniffing around last week, but Elan has distanced itself from the talk.

Big pharma’s strategy of using marketing joint ventures to allow them to win big returns on successful drugs without taking on the bigger risks associated with Biotech failures has proven to be more valuable than buying biotechs outright. And many of the biotech sector’s big prospects are spoken for by way of joint venture. With the economic crisis having forced private equity to the sidelines, M&A is now a strategic buyers’ market. Elan is probably counting on a current flash of merger activity to cloud any negatives for potential buyers.

Elan’s existing big drug partners - Wyeth and Biogen - might seem like the best fits, or at least the least messy. They both have agreements allowing them to buy the drugs they co-market. But Biogen has been under pressure from none other than Carl Icahn to sell itself, so a big acquisition looks challenging. That leaves Wyeth, which said recently just last week its strong cash position could enable it to make new biotech acquisitions. If Wyeth makes a move, it should expect to get excellent terms.

Others Deals News:

* Deutsche Bank is in talks with Deutsche Post about the timing of its planned takeover of retail lender Postbank, sources with direct knowledge of the matter told Reuters.

* Royal Bank of Scotland is expected to sell up to $2.6 billion worth of shares in Beijing-controlled Bank of China as early as Tuesday, market sources said.

* BNP Paribas announced a formation of a T$2 billion ($60 million) insurance tie-up with Taiwan Cooperative Bank, aiming to tap one of Asia’s top insurance markets.

* USJ Co, which operates a Universal Studios theme park in Japan, may go private in a buyout led by Goldman Sachs, five people familiar with the matter said.

* British-based newspaper publisher Mecom is selling its German operations to Germany’s M. DuMont Schauberg for 152 million euros ($204 million) in cash, to reduce debt which has hammered the company’s stock.

* China Eastern Airlines, the weakest of the country’s three biggest airlines, wants to sell a roughly 30 percent stake in regional carrier Happy Airlines to alleviate its strapped finances, company sources said.

* Emirates Telecommunications Corp said a consortium it is part of would pay 300 million euros ($402.1 million) to acquire a mobile phone licence in Iran and was in talks to buy an operator in Iraq.

* Malaysia’s Top Glove Corp, the world’s largest producer of rubber gloves, said it is in talks with several companies for potential acquisition, but did not name any.

* Flag carrier Air China said that its parent group was starting preliminary talks on the possible acquisition of East Star Airlines, a small private carrier based in the central city of Wuhan.

* Lead managers for a deal to sell 36 percent in Hynix Semiconductor have agreed to sell the stake by a tentative deadline of September, a leading Hynix shareholder said.

* Australia and New Zealand Banking Group has lifted its stake in Indonesia’s PT Panin Bank, paying $114 million for an extra 8.4 percent, as part of its Asian growth strategy, the bank said.

(Photo: Kelly Martin, President and CEO of Elan, speaks at the Reuters Health Summit in New York November 17, 2008. REUTERS/Brendan McDermid)