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ViroPharma: Lev Acquisition Appraisal
I'm an intern at an M&A arb hedge fund and I looked at this deal pretty closely. First of all, the guy who wrote this article needs to read the merger agreement between Lev Pharma and Viropharma - it is an 8k and is filed with the SEC. The first contingency payment is only due if Lev obtains orphan status for the acute treatment of HAE (not prophylactic). The first payment can also occur if after two years of approval for orphan treatment of prophylaxis, no other companies receive orphan status for treatment of acute HAE. The second payment will only occur when Lev contributes $600M in total sales. Both CVRs are $1 per share.
I laughed when I read the first sentence of this article "Viropharma recently acquired Lev Pharmaceuticals". The deal is FAR from over - and the the annualized spread is huge (over 40% excluding CVRs) indicating arbs are staying out of the deal because of the enormous risk. In fact, if the FDA doesn't approve Cinryze, it will constitute a Material Adverse Effect (as defined in the merger agreement) and the deal will be terminated in which Lev will have no recourse. For some reason, you are claiming that LEVP will get a CVR if Cinryze is approved for prophylaxis... you're just wrong. Read the merger agreement before you write a huge article on a proposed transaction.
Aug 15, 2008. 08:42 PM
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Newcastle, RAIT Financial: The Long Case for REITs
Devil, you should listen to the conference call - they explain the negative book value. The GAAP book value only reflets market value changes for securities and derivative and does not mark their loan investments or debt. Because of dramatic spread widening in the quartrer, the GAAP book value was negative. However, the number in no way represents the the company's true economic book value. A beter metric to use is the adjusted book value, which for Newcastle comes out to $16.23 and is equivilent to FAS 159.
I hope this answers your question...
May 15, 2008. 11:43 AM
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