Valeant and Pfizer Kept Healthcare in the Limelight
In November, Pfizer (PFE) and Allergan (AGN) confirmed their merger deal to form the world’s biggest drug company by sales. This was the largest deal of 2015.
Examining the SPY ETF and how US Stocks Performed in 2015
As we enter 2016, let’s review how Wall Street and US stocks, represented here by the SPDR S&P 500 ETF (SPY), responded to global events throughout 2015.
How are XLV’s Moving Averages Trending?
Out of 56 stocks in XLV’s portfolio, a total of 32 stocks were trading above their 20-day moving average.
Biotechnology Traded below Moving Averages in Last Week of August
Biotechnology and pharmaceuticals are the two largest subgroups of XLV. In the biotechnology subgroup, 100% of the stocks are trading below their 20-day, 50-day, and 100-day moving averages.
The Biotech Sector Is in a Downward Long-Term Trend
Though most of the biotech stocks rebounded from the recent lows, the long-term trend for biotech seems to be heading downward.
WDTI: A Global Alternative Fund
The Wisdom Tree Managed Futures ETF (WTDI) mainly tries to mimic a global macro hedge fund strategy by diversifying its portfolio on a worldwide level and by including commodities futures in its holdings.
LALT: A True Hedge ETF
The PowerShares Multi-Strategy Alternative Portfolio ETF (LALT) is one of those rare alternative ETFs that tries to replicate the performance of its index by active management of its assets.
Alternative ETFs’ Investment Strategy Guide
A liquid alternative ETF, the ProShares Large Cap Core Plus ETF (CSM) tracks a long-short index of Credit Suisse 130/30.
Is the Cigna-Anthem Merger a Setup?
Cigna has been put ‘in play,’ which means other buyers will be taking a look. The spread is wide, but there are major unanswered questions. It makes sense to give this one a wide berth.
Anthem Files Bear Hug Letter for Cigna on June 21
On June 21, Anthem (ANTM) filed a bear hug letter for Cigna (CI). A bear hug letter is a formal press release in which an acquiring company discloses its interest in a target company.
Hospira–Pfizer Deal Update: Shareholder Approval, 2nd Request
A total 99.4% of the shares voted to approve the transaction. It’s unusual to conduct a shareholder vote while there are still conditions pending on a deal.
Backing Out of the Synageva BioPharma Deal, Part 3
Things like acts of war and natural disasters aren’t MACS unless they disproportionately affect Synageva relative to other early-clinical-stage biopharmaceutical companies.
Backing Out of the Synageva BioPharma Deal, Part 1
In this case, the material adverse change clause lays out the circumstances under which Alexion could back out of its deal with Synageva. This clause is one of the first things that arbitrageurs look at.
Synageva BioPharma: A Pipeline of Therapeutic Programs
Synageva has additional first-mover and potentially bio-superior protein therapeutic pipeline programs for other rare diseases at different stages of preclinical development.
Alexion Pharmaceuticals Would Benefit from Synageva Pipeline
This deal is about buying a pipeline and intellectual property. Synageva Biopharma’s drug Kanuma is used for the treatment of LAL D, a childhood disease.
The Synageva–Alexion Merger: Stock and Cash Considerations
The Synageva–Alexion transaction is a merger involving cash and stock considerations. These deals have a longer time frame than cash-tender deals, which can close in as little as 45 days.
Alexion Pharmaceuticals Pays up to Get Synageva BioPharma
The transaction’s risk-to-reward ratio explains why the spread is wide. In fact, it looks like Synageva has some good protections in the material adverse effect clause.
What’s the Spread in the Perrigo–Mylan transaction?
In the Perrigo–Mylan situation, Mylan sent a bear hug letter to Perrigo to express its interest in it. Perrigo rejected that approach, and so Mylan went and filed a formal offer.
Key Factors That Impact Johnson & Johnson’s Forward Valuation
Two factors expected to impact Johnson & Johnson’s forward valuation are increasing competition for Olysio and further decline in international revenues.
Mylan, a Leading Pharmaceutical Company
Mylan (MYL) is a leading global pharmaceutical company. It sees future growth in injectables, respiratory, biologics, complex products, and antiretrovirals.
Teva 1Q15 Earnings Preview: Profitability Drivers
Teva plans to reduce the cost per tablet unit from $15 to $10. It’s shifting manufacturing operations to low-cost areas to improve product profitability.
Magnetar Capital Raises Its Stake in Actavis
In the fourth quarter, Magnetar increased its exposure to Actavis. It bought 42,107 shares in the pharmaceutical firm. It represents 1.5% of the fund’s 4Q14 portfolio.
What Are Teva’s Long-Term Prospects?
Teva’s long-term prospects seem bright due to a focused product pipeline in its specialty and generics segments.
Teva’s Debt Levels – Best among Competitors
In terms of debt-to-EBITDA, Teva is well placed at 2.0x–2.5x to maintain a low credit risk. This will allow Teva to use debt for acquisitions and growth.
Why a Change in Strategy Will Improve Teva’s Profitability
Teva’s strategy includes driving organic growth, focusing on key growth markets, and maintaining the Copaxone franchise and other specialty products.
Teva’s Risk Exposure in a Dynamic Environment
Teva operates in a dynamic environment with a number of risks that could have a material adverse effect on the company.
Central Nervous System Is Key to Teva’s Specialty Medicines
Revenues for Teva’s (TEVA) Specialty Medicines segment grew by 2.1% to $8,560 million in 2014, from $8,388 million in 2013.
Teva’s Generics Medicines Segment Is Geographically Diversified
Teva (TEVA) has diversified its generics business. In 2014, it generated 45% in the United States, 32% in Europe, and 23% in the rest of the world.
Teva: Top Generics Pharmaceutical Company Worldwide
Teva Pharmaceutical Industries Ltd. (TEVA) is a leader in the global generics pharmaceutical industry on the basis of revenues of ~$20 billion in 2014.
How Actavis and Allergan Merger May Boost Branded Business
Actavis intends to invest ~$1.7 billion in R&D annually. It expects to add ~15 projects in near- and mid-term development to the company’s product pipeline.
North American Brands’s Position of Strength
The top 10 products across Actavis’s therapeutic segments accounted for approximately 70% of net revenues of segmental revenues in fiscal 2014.
3 Key Therapeutic Segments Drive Branded Revenues
Actavis’s North American Brands segment revenue increased significantly by 336% year-over-year to $4,631.4 million in 2014 from $1,062.5 million in 2013.
How Actavis Organizes Its Business
Anda, Inc. is the fourth-largest generics distributor in the US, accounting for about 13% of total net revenues in fiscal 2014 and 14% in fiscal 2013.
Actavis: A Diversified, Fully Integrated Specialty Company
In 2014, Actavis generated revenue of $13,062.3 million, employed 21,600 workers, and had more than 30 manufacturing and distribution facilities worldwide.
Parsing the Pharmacyclics–AbbVie Merger MAC Clause: Part 2
In the MAC (material adverse change) clause of the Pharmacyclics–AbbVie merger agreement, a financial crisis or a recession is not considered a MAC.
The Pharmacyclics–AbbVie Merger: The Basics of AbbVie
A major reason for the Pharmacyclics–AbbVie merger is to diversify AbbVie away from its reliance on a single product, Humira, and boost its pipeline.
Is the Pharmacyclics–AbbVie Merger a Setup?
The Pharmacyclics–AbbVie merger has been structured in such a way to minimize the potential upside in the election.
The Pharmacyclics–AbbVie Merger: What Are the Details?
In the Pharmacyclics–AbbVie merger, Pharmacyclics (PCYC) shareholders will receive $261.25 per share. The companies expect a second quarter 2015 close.
The Pharmacyclics–AbbVie Merger – Shareholders Could Benefit
The Pharmacyclics–AbbVie merger is a tender. No shareholder votes are required. If you play your cards right, you’ll get at least $261.25 and possibly more.
What Helps a Generic Company Boost Its Profitability?
Leading companies are taking various steps—like cost optimization, business rationalization, outsourcing, and acquisitions—to manage costs and boost profitability.
Generic Companies Are Fighting for Market Share
The generic pharmaceutical industry is characterized by low concentration. The top ten global generic companies hold less than 50% of the market share.
What’s Supporting Continued Growth in the Generics Market?
The global generics market was valued at $168 billion in 2013. From 2013 to 2018, it’s expected to grow at a CAGR of 11% to reach $283 billion.
Complex Generics Are Attractive Due to High Margins
Complex generics are large and complex formulations or active ingredients used to treat chronic and life threatening diseases like cancer, Hepatitis C, and HIV.
Specialty Generics: Why Are They Getting More Attention?
There are two categories of specialty generics – NTE (New Therapeutic Entities) and Complex Generics. In this part of the series, we’ll discuss NTE.
Affordable Pricing Is Driving the Generic Drug Market
Generic drugs are cheaper. They have a less expensive and time consuming development and approval process. This encourages other players to enter the market.
Background on Macerich
Macerich is in the second tier of large retail REITs. It’s a player in the community or power shopping center segment, along with Kimco Realty (KIM).
Background on Simon Property Group
Simon Property Group also has a large international presence. It owns premium outlets in Japan, South Korea, Malaysia, and Mexico.
Simon Property Sends a Bear Hug Letter to Macerich
Simon Property (SPG) has proposed to buy Macerich (MAC) for $91 a share, half of which will be cash and half of which will be SPG stock at a fixed ratio.
Freescale–NXP merger: Salient points of the deal
Basics of the transaction The Freescale–NXP merger transaction is a cash and stock transaction, which means Freescale shareholders will participate in the upside by holding stock in the merged entity. The equity value of the transaction is roughly $11.8 billion and includes about $4.9 billion in net debt. Terms of the transaction Freescale Semiconductor (FSL) shareholders […]
The Freescale–NXP merger regulatory path to approval
The companies expect to have a second antitrust-related request, and there is always the risk of an in-depth regulatory review by the European Union.
Freescale–NXP merger: The material adverse change clause, part 3
A war between China and Taiwan is not a material adverse change. An earthquake that takes out a Freescale manufacturing facility is.
Freescale–NXP merger: The material adverse change clause, part 2
The material adverse change clause describes the way that NXP Semiconductors (NXPI) can back out of the Freescale–NXP merger.
Freescale–NXP merger: The material adverse change clause, part 1
Pretty much anything that has a material adverse effect on the company will be considered a material adverse change, but there are exceptions to that rule.
The Freescale–NXP Merger: Freescale at a glance
The Freescale–NXP merger is driven by complementary offerings. Freescale is active in the auto, consumer, networking, and industrial markets.
The Freescale–NXP merger: A large deal in the semiconductor space
The key to the Freescale–NXP merger is the timing. The companies are guiding to a 2H15 close, likely in the fourth quarter.
What is the downside if the Salix–Valeant merger breaks?
If the deal breaks, does Salix’s stock go back up? Probably not. Press reports noted that Salix announced it was seeking strategic alternatives.
The Salix–Valeant merger MAC clause: Part 3
If these carve-outs affect Salix in a disproportionate way compared to other pharma companies, then it is still a MAC and Valeant can back out of the deal.
Parsing the Salix–Valeant merger MAC clause: Part 2
Pretty much anything that has a material adverse effect on the company will be considered a MAC, but there will be exceptions to that rule.
Parsing the Salix–Valeant merger MAC clause: Part 1
In the deal between Salix Pharmaceuticals and Valeant, the MAC clause lays out the circumstances under which Valeant can back out of its deal with Salix.
The Salix–Valeant merger: Basics of Salix Pharmaceuticals
Xifaxin is by far Salix’s largest product, accounting for ~70% of its revenues in 2013. Xifaxin is a big reason for the Salix–Valeant merger transaction.
The Salix–Valeant merger will follow a cash tender timeline
The Salix–Valeant merger is a cash tender, meaning there are no shareholder votes required. Cash tender deals tend to have very short timelines.
More on the Baker Hughes and Halliburton merger MAC clause
This article further discusses the MAC clause in the Baker Hughes and Halliburton merger agreement.
Rationale for the Baker Hughes and Halliburton merger
In the Baker Hughes and Halliburton merger, both parties are strong players, and the deal is relatively complementary.
Increased Mergers and Acquistions Help, But Headwinds Persist
Increased mergers and acquisitions activity in the past couple of weeks has supported US equity markets (SPY).
Basics of Office Depot
Office Depot is a global supplier of office products and services to businesses and consumers. The company has 64,000 employees.
Don’t trade the Office Depot spread like a typical arb spread
Once the proxy comes out, check the transaction background and see if they ran an auction. If not, a private equity buyer may step in after the deal breaks.
Handicapping the risk-reward balance of the Office Depot deal
Staples stock was up on the announcement, and the analyst community understands the pressure this segment is under. At any rate, no Staples vote is needed.
Parsing the Office Depot Material Adverse Change clause, part 1
Regarding the Office Depot and Staples deal, the MAC clause lays out the circumstances under which Staples can back out of its deal with Office Depot.
Understand the basics of the Staples–Office Depot merger
If another bidder tops the Staples bid, and Office Depot is unable to get shareholder approval, it will owe Staples a breakup fee of $185 million.
Parsing the Hospira material adverse change clause, Part II
A war that affects the economy as a whole is not a material adverse change, but a hurricane that takes out Hospira’s manufacturing facilities is.
Parsing the Hospira material adverse change clause, Part I
The material adverse change clause lays out the circumstances under which Pfizer can back out of its deal with Hospira.
Hospira: A leader in specialty injectable pharmaceuticals
The Hospira portfolio includes generic acute-care and oncology injectables, biosimilars, and integrated infusion therapy and medication management products.
Hospira–Pfizer merger: Benefits from growing biosimilars market
One of the major drivers for the Hospira–Pfizer transaction is the expected growth of the sterile injectables and biosimilar markets.
Getting the Hospira–Pfizer merger deal done
Prior to shareholder approval of the transaction, if Hospira is approached by another suitor, it could discuss a merger with them.
Merger must-knows: The shareholder vote and 90% tender condition
Once the SEC approves the proxy, a vote is scheduled. Usually, the last condition for a deal is the vote of the target shareholders.