Here is what Zack's Investment Research had to say today -- about why Schering-Plough needs this (or some other) reverse merger deal. Notably, theirs echoes many of my weeks-and-months-long themes (foreign currency headwinds; possible J&J reversions, but no outright counter-bid; likely delay in the merger closing date) -- including the notion that the transaction is far more in the nature of a bust-up, than an intact "merger of equals".
. . . .On a stand-alone basis, we expect Schering-Plough's (SGP) sales to increase only 2% in 2009 as increased competition to prescription Claritin/Clarinex comes online and consumers shift discretionary spending away from Animal Health and Consumer products. We expect EPS to fall 5.2% in 2009 to $1.68 as gross margins contract from 2008 levels as a result of a reduced benefit from foreign exchange. SG&A expenses should remain in check as additional benefits are reaped from the PTI [sic -- PTP] program.
The proposed merger with Merck & Co. (MRK) is currently expected to close in the fourth quarter. However, we believe Johnson & Johnson (JNJ) will raise some form of challenge relative to rights to Remicade and golimumab, which could potentially delay consummation of the deal.
While a counterbid for Schering is not out of the question, we believe J&J is more likely to seek full or additional rights to Remicade and golimumab or possibly other financial concessions. . . .
I think I'll go check my stats-log, to see how many hits I received from computers within Zack's internal range of IP addresses -- in the last four weeks. Heh.
2 comments:
I wonder how much of this might be true of Merck's acquistion of S/P:
Invoking a term that some pharma CEOs are beginning to throw around—only without Craigie’s bite—Craigie continued: “Bolt-on acquisitions--we love them. We’ve got a great track record. We have a very defined model. We will only – and I say only—buy a number one or number two brand. We like higher growth brands with higher margins, and we prefer asset light deals. Again, we don’t want plants, headquarters, people. We don’t want anything. We just want brands.”
From: http://www.invivoblog.blogspot.com/
I think it clear that Merck's reverse merger of Schering-Plough is no "bolt-on".
True, Merck back-fills a potential patent-cliff, in acquring Schering-Plough -- but the back-fill only works -- if the Schering candidates make it to market (clear FDA).
Moreover, this one is no "asset-light" deal -- in fact, all of pharma is considered pretty asset-heavy -- at least when one buys whole companies.
I think the reference is meant to apply to simply buying the rights to a drug -- which is then "bolted on" to an existing plant's capacity, at the acquiror's shop.
That is decidedly not this deal -- at all.
In fact, Merck will be shedding large chunks of the combined businesses -- to clear anti-trust review, and to make more economic sense -- in this newly-emerging health-care environment.
Thanks for the comment!
Namaste
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