Biotech Buyout Frenzy Continues

by: H.S. Ayoub

It seems that the medical and biotech buyout frenzy of late 2006 continued well into last week with major deals dominating the week's headlines.

Mylan Laboratories (NASDAQ:MYL) announced that it will buy Merck KgA's (NYSE:MRK) generic drug unit for $6.6 billion. How expensive is this price? Well, consider that Mylan's market cap was $5 billion. The company had to issue about $2 billion in stock and related debt just to complete the transaction. Wall Street was obviously not too positive on the price paid by Mylan as the company's stock fell 12% on the day.

Cardinal Health (NYSE:CAH) offered $1.5 billion to acquire Viasys Healthcare (VAS). This to me looks like a great pick up by Cardinal, since Viasys's array of ventilators and diagnostic instruments complement its line of hospital supplies. Cardinal Health paid the $1.5 billion all in cash, and Viasys should add to its bottom line almost immediately.

Biosite (BSTE) finally agreed to be acquired by Inverness Medical Innovations (IMA) for $92.50 a share, after Beckman Coulter (NYSE:BEC) refused to increase its own offer of $90 a share. This bidding battle between Inverness and Beckman Coulter pushed Biosite's share price up by more than 66%.

Bausch & Lomb (BOL), a leading contact lens maker, had agreed to be taken over by private equity firm Warburg Pincus for $4.7 billion, a 6% premium to the prior day's closing price. While some believed it to be a pretty low offer, I personally think that with Bausch & Lomb's many current legal issues with its recalled contact lens solutions, not many other suitors would have paid any more.

Not as large of a deal, but a healthcare related deal nonetheless, is the purchase of IOMED (IOX) by privately-held orthopedic device company ReAble for $22 million. This shows that the interest in biomedical firms is strong no matter the size.


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