Unstructured Finance

Breaking bad, the Bitcoin addition

It wasn’t too long ago that Ross William Ulbricht was writing his master’s thesis for a degree in chemical engineering. Now the 29-year-old San Franciscan is looking at spending many years in jail after being arrested by federal authorities on a variety of drug trafficking charges.

The purported founder of Silk Road, the notorious drug trafficking website, was arrested Tuesday by the FBI and appeared in a San Francisco federal court on Wednesday.  A bail hearing was set for Friday. Silk Road, an online marketplace where more than 900,000 registered users bought and sold everything from cocaine to heroin to molly (aka the new ecstasy craze) was shut down after roughly three years in operation.

Reuters reporter Emily Flitter spoke to Ulbricht’s parents in Austin, Texas, and the couple not suprisingly seemed shocked by the allegations against their son. Said Ulbricht’s mother, Lyn Lacava: “I know he never meant to hurt anyone.”

How Ulbricht made the transition from a Penn State student with a masters in material science to the alleged mastermind behind a platform for international drug trafficking isn’t clear. Presumably that story will come out as the case against Ulbricht winds it way through the courts.

But the Silk Road story isn’t a totally a new one.

In media reports the past year about the growing popularity of Bitcoin with the Silicon Valley set, Silk Road often emerged as the darker side of digital currencies and websites that permit customers to conduct business in anonymity. Users of Silk Road could only make payments in bitcoin and hid behind pseudonyms, all part of the design to conceal their identities. Ulbricht’s alias was Dread Pirate Roberts which he simply shortened overtime to DPR.

DealZone Daily

U.S. drugstore operator Walgreen is to buy rival Duane Reed for $618 million from private equity firm Oak Hill Capital Partners, giving the company the market lead in New York. The acquisition brings the company 257 new stores in the city and has prompted analysts to think that struggling chain Rite Aid might make an attractive target for Walgreen rival CVS Caremark as it looks to catch up.

Britain’s Babcock International has increased a proposed offer to buy defence firm VT Group to as much as 1.29 billion pounds, but its advances have again been rejected.

For more Reuters deals stories, click here.

In other media:

Beijing’s sovereign wealth fund, China Investment Corp, is investing $1.5 billion with three private equity secondary specialists – firms that buy positions in buyout funds from other investors – the FT reported. CIC will put $500 million with each of Lexington Partners, Goldman Sachs and Pantheon Ventures in special accounts that will be kept separate from the firms’ main funds.

Warner Chilcott to buy P&G’s pharma biz

Warner Chilcott Plc agreed to buy the pharmaceutical business of Procter & Gamble Co for $3.1 billion, winning an auction that drew few bidders.

The unit had attracted interest from some private equity firms but very few pharmaceutical bidders, sources familiar with the auction said.  Many of the key products within P&G’s pharma unit, such as the overactive bladder drug Enablex, already face stiff competition from a wide range of rival drugs, while other products are close to their patent expiration. Other pharmaceutical companies are struggling enough with these problems without buying a business that echo these issues, the sources said.

As a result, Warner Chilcott was essentially in a bidding war alone. Under terms of the deal, Warner Chilcott will pay $3.1 billion in cash.  It will finance the deal, and restructure some of its existing debt, through $4 billion in funding it received from a syndicate of banks, sources said.

Is Genentech taking over Roche?

Roche’s megabucks Genentech buy is looking more like a reverse takeover — in some ways, at least.

Roche headquartersThe 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).

Out of work, but plenty of Viagra

Pfizer has launched a new program to provide free drugs, ranging from cholesterol fighting Lipitor to its infamous little blue pills, to Americans who have lost their jobs in 2009.

“The current economic environment has added considerable new stress to the daily life of millions of hard-working Americans, and our colleagues are responding to help their neighbors in the communities where they reside,” said Pfizer CEO Jeffrey Kindler.

Click here for an application to the MAINTAIN (Medicines Assistance for Those who Are in Need) program, which kicks off on July 1.

Cool clothing for the cartel

MEXICO-DRUGS/Put this in the “No press is bad press” file: We all know the trendy Abercrombie & Fitch clothing brand is a favorite of teenage Americans and European and Japanese tourists.  Apparently it’s a favorite of alleged drug lords, too.

Vicente Carrillo Leyva, a suspected Mexican drug trafficker, was hauled in front of the cameras last week after his arrest — wearing a natty white track suit with the Abercrombie logo prominently displayed on his chest.  The accused leader of the Juarez cartel was seized while jogging.
    
No word on what effect the arrest will have on sales of white A&F track suits.

(Photo: Reuters)

Credit crisis advantage?

RocheThe credit crisis may just be the leverage Roche needs in its bid for Genentech.

The Swiss drug maker went hostile with its bid to buy the 44 percent of Genentech it doesn’t already own. But in a rather unusual move, it has gone to shareholders with an offer that is actually lower than the $44 billion bid it initially made for the U.S. biotech group.

Investors now have a public tender offer at $86.50 per share in cash, valuing the deal at $42 billion, down from $89 per share earlier.

After the initial announcement in July, Genentech shares rose to a high of $99.05, but later fell back below the offer price as the credit crisis bit, giving Roche the leeway to lower its bid.

A trigger for more drug deals?

Jeff KindlerPfizer 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.

Pfizer: Dealing with Lipitor side-effects

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.

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