Sector News

Will buyers go after Mylan once it inverts? Don’t count on it, analyst says

December 3, 2014
Life sciences
As Mylan gears up to close a $5.3 billion deal to buy a chunk of Abbott’s generics business and shift its tax base to the Netherlands, some investors are speculating it could itself become a target for another stateside company looking for a tax inversion. But to that, Sanford Bernstein analyst Tim Anderson says they shouldn’t hold their breath.
 
The reason? Most of the company’s likely suitors don’t actually make that good a match, he wrote in a Tuesday note to clients. Take Pfizer, for example, which has been jonesing for a tax inversion since this spring’s failed play for British pharma giant AstraZeneca. Mylan will be too small to help the company complete one, Anderson notes, as foreign targets must be at least 20% of the buyer’s size.
 
And then there’s Teva, for whom the Mylan could be too large to swallow. With a market cap of $48 billion, Teva would need to make more than a couple significant divestments–like Epipen, which generates about 30% of Mylan’s profits–to afford the Pennsylvania drugmaker, whose own market cap is $22 billion, Anderson points out.
 
“Buying Mylan would mean the company will commit to a different direction than what it was apparently planning on,” he said.
 
If any interested buyers do go after Mylan, they’ll have to take heed of the company’s strategic plan to lift its share price to $73 by 2018–a 26% premium to its current price. “We do not see the board of the company accepting a lower offer,” he wrote.
 
Of course, “one should never say never about transactions,” he said, and that doesn’t mean both Pfizer and Teva won’t be pursuing other targets too–inversion or no inversion. Analysts figure Pfizer needs to make a move in the near-term, and some industry watchers think it could still come back and make another run at AZ. As for the Israeli generics behemoth, it’s been scouting for deals in the $10 billion to $15 billion range, Anderson says. Pickups could potentially help Teva toward its stated goals of widening its emerging markets footprint and becoming a biosimilars contender.
 
By Carly Helfand
 

comments closed

Related News

May 21, 2022

As monkeypox cases emerge in US and Europe, Bavarian Nordic inks vaccine order

Life sciences

A monkeypox outbreak is emerging in the U.S. and Europe, and at least one country is amping up countermeasure preparedness. Bavarian Nordic has secured a contract with an unnamed European country to supply its smallpox vaccine, called Imvanex in Europe, in response to the emergence of monkeypox cases, the Danish company said Thursday.

May 21, 2022

Moderna chairman Afeyan defends hiring practices after CFO debacle: report

Life sciences

Moderna’s recent chief financial officer debacle—in which Jorge Gomez departed on his second day on the job—raised questions about the company’s hiring process given its rush to global biopharma prominence. The most obvious one: How was it possible for Gomez to be hired when he was under investigation by his previous employer, Dentsply Sirona of Charlotte, N.C.

May 21, 2022

Merck to pay up to $1.4B in cancer deal with Kelun, but details are scarce

Life sciences

Merck & Co. is plucking a cancer project from the branch of Chinese-based Kelun Pharmaceutical for up to $1.4 billion, but details from the New Jersey-based Big Pharma have been hard to come by. The deal, first disclosed Monday on the Shenzhen stock exchange, has Merck handing over $47 million in upfront cash in exchange for ex-China rights to a “macromolecular tumor project.”