Biotech Buyout Frenzy Continues

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 (MYL) announced that it will buy Merck KgA's (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 (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 (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.

RELATED READING:
- Inverness Bids Even Higher for Biosite
- Biotech Buy-Outs Continue, Solexa latest Pickup

Comments

[jimmy Turano:]

H.S.AYOUB GREAT ARTICLE!
Since my first love in the stock market is "drug"stocks", I wish to share with you an average investors point of view. Investing in drug stocks is no different than play roulette. You can buy a dozen stocks and hope your number comes in. However, spreading your money all over the board limits your net return and can even cause a loss.
The simple way is to focus on a half dozen stocks that have the % probability of hitting more than the rest! With that said, if the average investor today 5/22 were to invest in the following, a year from now it's more probable than not to double or nearly double your money on the following:
ACUS, INCY, NABI, XOMA, UPBS, AND BIIB.
FROM A $1 DOLLAR AND CHANGE ON UP AND
ONLY FOCUS ON THESE LEAST EXPENSIVE STOCKS WHO HAVE EARNINGS,PIPELINE AND GREATEST CHANCES OF BEING BOUGHT OUT TO TOP IT OFF! WHEN YOU FIND HIDDEN GEMS LIKE THESE INVESTORS CAN SIT BACK AND RELAX! You'll be laughing all the way to the Bank!
Jimmy T. 7423

2007 May 22 09:30 AM

[mugwumps88:]

Question for Ayoub or anyone else who cares to comment ..what would a reasonable formula be for detemining PPS for shareholders of a company that is about to be bought? The company has a great product with tons of growth iminent, which is why a much bigger fish wants to swallow them.

Sales projections for 09 are $136M at least, possibly much higher. Profits margin in the 40% range. Current PPS is $.017. TIA

Mar 20 08:24 PM