Saturday, February 1, 2014

A Very Well-Taken Set Of Points: On The Various Renewed Consumer Health & Animal Health Rumors

Okay -- this is why I get such a kick out of providing this modest forum. Smart people tend to stop by, and offer sweetly piercing insights -- all they need is the protection of knowing that the sanctity of their true identities will be scrupulously guarded. [And, in a back-handed way, this is a reminder/public service announcement -- that I protected the names of several whistle-blowers in the ENHANCE Vytorin debacles of 2008-2009 vintage. That "bad night in the bar" resulted in -- among other smaller settlements -- a $688 million securities fraud settlement.]

Here, once again -- rest assured -- your anonymous commentary will remain just that. No email required; no identifying marks at all, if you don't feel like it. But until I am rid of my British troll(s), the comment may wait in the moderation cue for just a few short hours (until I wake up), before appearing on the public side of the site. [End, commercial message.]

So -- as an entirely anonymous commenter astutely points out, the Reuters story of last night is useful in at least one other respect. One that I entirely neglected to mention. From here, just read the commentary, in full:

. . .from the Reuters article, the only new and important things are the names: Reckitt Benckiser Group (RB) and Proctor & Gamble (PG).

Novartis cannot / does not want to swap not only because of "antitrust issues", but because of type of assets Merck is offering. Novartis does not need Coppertone or Dr. Scholls. . . . sold mainly here (in the US), however representing a quarter of the assets. . . it all creates "complexities" in valuation as well.

Reckitt Benckiser Group is a much better suitor. . . that is why the name is important. . . . or it will be sold in pieces. . .

Anonymous at 4:12 AM

Precisely. And I do think Merck is ultimately pretty likely to sell off (but not asset swap with Novartis) the Consumer Health businesses. We won't learn that, definitively, until mid- to late-2014, though -- in my experienced opinion.

Finally, I would also like to point out that the story has been slightly modified from its original form. It now reads ". . .complexity of valuing different businesses," in the spot where the phrase originally (before my post of last night was seen by the Reuters editors -- and I have the saved Statlog to prove it!) read ". . .difficulty of business valuations. . . ."

And that editing, my friends, all but confirms the accuracy of the above anonymous commenter's points. If the strategic plan of a "swap party" like Novartis is to immediately off-load the Coppertone and Dr. Scholls lines, it makes it a little more difficult to price the overall deal, since one is not looking for synergy values -- inside the acquiror, for those businesses. Even so, it is fairly common to be prospectively shopping pieces of a company one intends on acquiring -- even before one prices the deal to acquire the main company. In fact, that is the way most prospective potential antitrust issues get solved, when two or more very large market participants set out to sell businesses to one another. Or buy them, from one another. So -- all of this posturing is related to the potential angles each putative party to a would be deal sees.

And again -- the white stuff is piling up outside -- time to stop savoring my coffee, cherry yogurt, banana and fresh OJ -- and go out to shovel, yet again. Be excellent to one another.


Anonymous said...

Condor said...

This is a new post now.


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