Friday, 27 April 2012

Mergers & Acquisitions - Week Ending 04/27/12

Setting the pace for what was a hectic start to the week, Nestlé purchased Pfizer’s infant nutrition unit for $11.9 billion. The deal, which is the largest in Nestlé’s history, will help the Swiss food giant to increase its presence in emerging markets whilst allowing the pharmaceutical group to focus on its core business. The news was met negatively on the markets, with the buyer and Pfizer falling 2% and 0.8% respectively. Monday saw two other pharmaceutical deals. AstraZeneca bought rival Ardea Biosciences for $1.26 billion. This is expected to give the bidder access to several attractive new products, including a new drug for the treatment of gout. AstraZeneca lost 1.5% as the target soared 52%, reflecting the large premium being paid. Thomson Reuters sold its healthcare unit to Veritas Capital for $1.25 billion. The sale will help provide the ailing analytics firm with some much needed cash. The seller closed 1.4% lower. Edinburgh Airport was purchased for $1.3 billion by Global Infrastructure Partners. GIP, which owns several airports already, is looking to harness its extensive experience to strengthen Edinburgh’s performance. The fund’s two main shareholders, Credit Suisse and General Electric were down 1.8% and 1.5% respectively. Vodafone acquired fellow telecoms firm Cable & Wireless for $1.7 billion. This will supplement the group’s wireless offerings with fixed line services, as well as increasing their fiber optic data line. Cable and Wireless gained 0.6% while the world’s second largest mobile carrier was relatively unchanged on the news. Later that day, Barnes & Noble received a much needed boost when Java Partners, an activist hedge fund, took a 12 percent stake in their company. The troubled bookseller is looking to revive their company through investing in a digital strategy, which is unproven as of yet. The stock was boosted over 18%.

The following day, AlixPartners was taken over by CVC Capital Partners in a deal believed to be in the range of $1 billion. The restructuring specialist has derived much of its custom in the past few years from stale economic conditions. The private equity firm’s backing should help it pursue global dominance. Building on the previous day’s biomedical news, Tuesday saw Amgen buy a 96 percent stake in Turkish pharmaceutical firm Mustafa Nevzat for over $600 million. They are looking to increase their presence in Turkey, a key growth region. The buyer grew by 0.5%. This trend continued into the midweek, with Watson Pharmaceuticals purchasing Actavis for $5.9 billion. The move, which is expected to create one of the world’s largest generic drug manufacturers, is a product of Watson’s desire to expand internationally. The buyer was up 1.5%. On Friday, Wells Fargo absorbed Merlin Securities, a prime brokerage firm, for an undisclosed amount. Although this is their first attempt at prime brokerage, most large US banks now provide such services; no surprise when you consider the growth in the hedge fund industry in the past decade. Wells Fargo dropped almost 1%.