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Two very different companies in different sectors find themselves in somewhat similar situations: They both make for interesting potential buyout plays.

The primary difference is that Jaguar (JAG), a diverse gold mining company in Brazil, received an unsolicited $1B buyout offer from China Shandong Gold recently, while Onyx (ONXX), a U.S. biopharmaceutical company specializing in cancer treatments, confirmed yesterday that it is considering putting itself up for sale and has hired Centerview Partners LLP to assist in the exploration of "strategic alternatives."

Both would likely be bought at a significant premium to today's prices, but are either worth a buyout play gamble at this time?

What we know (and don't):

Jaguar

Withstanding a bidding war for Jaguar, the current offer for the company, as reported by Reuters, represents a 36% premium to current levels. It is noteworthy that it recently lowered production guidance for FY 2011 to 155,000-163,000 ounces of gold at a cash cost of $835-$845 per ounce.

Valuation Measures:

Market Cap (intraday)5:

573.98M

Enterprise Value (Nov 29, 2011)3:

719.66M

Trailing P/E (ttm, intraday):

N/A

Forward P/E (fye Dec 31, 2012)1:

12.59

PEG Ratio (5 yr expected)1:

N/A

Price/Sales (ttm):

2.49

Price/Book (mrq):

2.11

Enterprise Value/Revenue (ttm)3:

3.13

Enterprise Value/EBITDA (ttm)6:

12.53

Balance Sheet:\

Total Cash (mrq):

101.72M

Total Cash Per Share (mrq):

1.21

Total Debt (mrq):

247.40M

Total Debt/Equity (mrq):

91.13

Current Ratio (mrq):

1.93

Book Value Per Share (mrq):

3.22

The stock is up nearly 19% over the last month from where it closed at $5.72 on October 28th. It should be noted that the stock reached an intra-day high of $8.16 when the unsolicited offer for the company was announced on November 16th. In the days since, shares have trickled down by more than 22% to where it closed yesterday at $6.80. It is currently up about 2% on the day.

JAG 1 Month Chart

Click to enlarge

JAG 1 Month Chart

Onyx

Any guess at what potential suitors would pay for Onyx, primarily known for its cancer product Nevaxar, would be nothing more than pure speculation at this point. But some recent positive developments for the company such as overhang removals and the recent announcement that the FDA accepted its NDA for Carfilzomibare sure to enhance potential valuation levels. As noted in a recent Bloomberg report:

"Onyx gave itself more strategic options last month when it settled a lawsuit with Bayer AG (OTCPK:BAYRY) over the experimental cancer medicine regorafenib and amended its collaboration agreement for Nexavar, said Jim Birchenough, an analyst at Bank of Montreal (BMO). The Oct. 11 agreement relieves Onyx from any future development or commercialization costs for regorafenib."

Valuation Measures:

Market Cap (intraday)5:

2.84B

Enterprise Value (Nov 29, 2011)3:

2.38B

Trailing P/E (ttm, intraday):

N/A

Forward P/E (fye Dec 31, 2012)1:

N/A

PEG Ratio (5 yr expected)1:

2.41

Price/Sales (ttm):

9.72

Price/Book (mrq):

4.59

Enterprise Value/Revenue (ttm)3:

8.48

Enterprise Value/EBITDA (ttm)6:

-22.74

Balance Sheet:

Total Cash (mrq):

506.89M

Total Cash Per Share (mrq):

7.97

Total Debt (mrq):

160.29M

Total Debt/Equity (mrq):

27.02

Current Ratio (mrq):

11.06

Book Value Per Share (mrq):

9.32

Over the last month shares of Onyx are up a mere 2.25%, but rose by more than 22% to its intra-day high of $46.07, where sellers piled on, driving the PPS down to $42.80 to close the day. Shares are trading more than 3% higher today with relatively high volume on the FDA news, suggesting many traders are already placing their bets or perhaps covering their short positions, as the prospect of an ONXX takeout becomes more real.

ONXX 1 Month Chart

Click to enlarge

ONXX 1 Month Chart

While I don't see anything coming of the recent Onyx announcement in the near future (and don't like the idea of chasing the stock right now), I can see something happening with the Jaguar situation relatively quickly and like the possibility of a bidding war potentially ensuing.

As such, I may take a stab at Jaguar if the share price comes down a bit more and will be watching Onyx like a hawk.

Source: Onyx Pharmaceuticals And Jaguar Mining: Are Either Worth A Gamble?