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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (2462)10/22/2010 9:58:19 AM
From: richardred  Read Replies (2) | Respond to of 6275
UPDATE 2-GE to buy cancer diagnostics company Clarient

Fri Oct 22, 2010 8:54am EDT

* To pay $580 mln, or $5 per common share

* Sees growing molecular diagnostics market

* Clarient shares jump to $5.04, above offer price

* GE, other industrials step up dealmaking (Rewrites, adds stock action, other details, background)

NEW YORK, Oct 22 (Reuters) - General Electric Co (GE.N) extended this month's acquisition streak, agreeing to buy cancer diagnostics company Clarient Inc (CLRT.O) for about $580 million net of cash and investments in a deal that sent Clarient shares up 35 percent in premarket trading.

GE's Healthcare unit will pay $5 per common Clarient share or $20 per preferred share, the companies said. Clarient's molecular diagnostics technology allows pathologists and oncologists to identify cancers, a market expected to triple to $47 billion within five years.

Clarient, based in Aliso Viejo, California, recorded 2009 sales of $92 million, according to Reuters data.

Before the deal was announced, Clarient shares closed at $3.74 on the Nasdaq on Thursday at their best level in more than a year. In premarket trading on Friday, they hit $5.04.

Goldman, Sachs & Co. (GS.N) was the financial adviser to Clarient on this transaction, while JP Morgan (JPM.N) advised GE Healthcare. The deal is expected to close in late 2010 or early 2011. Stockholders holding about 47 percent of Clarient's outstanding Clarient stock have agreed to tender their shares.

Safeguard Scientifics Inc. (SFE.N), which owns 26 percent of Clarient shares, said separately it would get $145 million from the deal. [ID:nWNAB6273]


GE, the largest U.S. conglomerate, has said it could spend up to $30 billion on takeovers over the next few years, marking a return to the dealmaking track it had exited during the recession.

On Oct. 6, GE reached a $3 billion deal for Dresser Inc [DRESS.UL], which makes gas engines used in oil production and mining, and bought a $1.6 billion portfolio of retail credit cards from Citigroup Inc (C.N), in moves intended to boost its energy and GE Capital businesses. [ID:nN06287898]

GE is also among the suitors for BAE Systems' (BAES.L) aerospace unit that could fetch up to $2 billion. Other suitors include Honeywell International (HON.N) and United Technologies (UTX.N), people familiar with the matter said this week. [ID:nN19135803]

The Clarient acquisition was the latest deal among cash-rich multinational industrial companies.

Earlier on Friday, Caterpillar Inc (CAT.N) signed an agreement to acquire engine maker MWM Holding GmbH from British private equity firm 3i Group Plc (III.L) for about 580 million euros ($810 million) in cash. [ID:nSGE69L0EN]

Earlier this week, industrial conglomerate Danaher Corp. signaled it was ready to step up dealmaking, saying it has $4 billion in acquisitions capacity. [ID:nN18269431] (Reporting by Nick Zieminski, editing by Dave Zimmerman)

To: richardred who wrote (2462)11/10/2010 12:55:03 AM
From: richardred  Respond to of 6275
Heart-Valve Win May Prod J&J, Abbott to Shop for Technology
By David Olmos - Nov 10, 2010 12:01 AM ET

Edwards Heart-Valve Win May Spur J&J, Abbott Push

The Sapien transcatheter heart valve made by Edwards Lifesciences Corp. Source: Edwards Lifesciences Corp via Bloomberg

Abbott Laboratories and Johnson & Johnson, pursuing a potential $2 billion market for heart valves that don’t require rib-cracking surgery, are shopping for companies with the new technology.

The two device-and-drug makers are seeking to catch up with Edwards Lifesciences Corp., the Irvine, California-based device maker whose new valve, called Sapien, cut death rates in a study in patients too sick to have open-heart surgery. Edwards is testing whether the technology, which inserts the valve using a thin wire threaded through arteries, works as well in less feeble patients, trimming recovery time to weeks from months.

Edwards’ finding “tilts the probability of earlier stage merger and acquisition transactions,” said Jed Cohen, a managing director at Leerink Swann in New York. J&J, of New Brunswick, New Jersey, and Abbott, of Abbott Park, Illinois, are likely to target smaller, more efficient technology to help them overcome Edwards’ head start.

“All the big corporations that are not in this space, and even some that have their own internal programs, are looking” to buy, said Antoine Papiernik, managing partner at Sofinnova Partners in Paris, in a telephone interview. “People are opening up their eyes to the idea that transcatheter valves are a revolution, like stents were to coronary artery bypass.”

If the ongoing trial is as positive as the initial result, the market for the new aortic valves may reach $2.1 billion by 2015, said Larry Biegelsen, a Wells Fargo Securities analyst based in New York, in a note to investors.

First U.S. Clearance

Edwards may seek U.S. marketing approval for its valve by the fourth quarter of 2011, said Michael Weinstein, of JPMorgan Securities in New York, in a Sept. 23 note to clients.

The device maker rose less than a percent, or 30 cents, to $66.46 in New York Stock Exchange trading yesterday, after jumping 65 percent in the 12 months before today. J&J decreased less than a percent, or 2 cents, to $64.31, and Abbott dropped less than a percent, or 40 cents, to $50.05.

Edwards already sells its Sapien heart valve in Europe, and reported worldwide sales of $112 million from transcatheter valves in 2009. It competes there with Medtronic Inc.’s heart- valve device acquired through a $700 million purchase of CoreValve in February 2009.

“With a very large market, people tend to think it is winner-take-all, and it looks that way in the beginning,” said David Singer, a partner at the San Francisco office of Maverick Capital Ltd., a Dallas-based hedge fund that was an early investor in CoreValve. That doesn’t mean that companies that aren’t first to market won’t be able to capture sizable sales if they can show their products work better for some patients, Singer said.

Valve Companies

Closely held companies working on heart-valve technology include Munich-based JenaValve Technology; Direct Flow Medical Inc., of Santa Rosa, California; Sadra Medical Inc., based in Los Gatos, California, and Symetis SA of Lausanne, Switzerland.

Founded in 2006, JenaValve has raised $46.8 million (33.5 million euros) from six European and one U.S. venture capital firm to develop its technology.

The company is developing two valves that can be implanted through incisions in either the upper leg or chest, said Helmut Straubinger, the company’s CEO. The system is designed to enable doctors to position the valve more accurately, he said.

A smaller delivery system would allow doctors to maneuver the device more easily through patients’ arteries, especially people with tinier blood vessels. An easier-to-maneuver system may persuade more doctors to adopt the technology, growing the market, said Dan Gladney, chief executive officer of Heart Leaflet Technologies of Maple Grove, Minnesota, acquired in April by Bracco SpA of Milan.

Cost for Studies

Clinical studies needed to get a heart valve approved in the U.S. may cost $40 million to $50 million, Gladney said.

“It’s a significant cost, but at the same time you’re looking at an opportunity that will be in the neighborhood of $2 billion,” Gladney said.

It’s unlikely that any of the smaller valve makers will fetch the $700 million price tag that Medtronic paid for CoreValve, said Leerink Swann’s Cohen. Medtronic also bought another heart valve maker, Ventor Technologies Ltd., for $325 million, in February 2009.

J&J, the world’s largest maker of health products, had $12.7 billion in cash and cash equivalents as of June 10 to pursue acquisitions. Sales of medical devices and diagnostic equipment, comprising 38 percent of its 2009 revenue, were $23.6 billion.

‘Very Interested’

J&J’s Cordis unit no longer has an internal program to develop a transcatheter aortic valve, though the company remains “very interested” in the technology, said Seth Fischer, Cordis group chairman, in a June investor call. Bill Price, a spokesman for J&J, declined to comment about potential acquisitions.

Abbott, a maker of drugs and medical devices, had $4.3 billion in cash as of June 10. In November 2009, Abbott acquired Evalve Inc., which makes transcatheter devices for a different part of the heart --the mitral valve -- for $320 million. Evalve’s product can also be implanted without the need for chest-cracking surgery.

Jonathon Hamilton, an Abbott spokesman, declined to comment about potential acquisitions.

In the Edwards’ study, published Sept. 22 in the New England Journal of Medicine, the company’s Sapien heart valve reduced death rates by 20 percentage points in frail, elderly patients with heart valve damage compared with standard treatment. The valves are used to treat a condition known as aortic stenosis, a narrowing of the heart’s aortic valve that ordinarily ensures proper blood flow.

Findings in 2011

Edwards is expected to present findings from a second phase of the trial involving hardier patients in the first half of 2011.

Edwards’ success “helps us from the exit-strategy standpoint because it increases the value in the eyes of the acquirers,” said Peter Barrett, an investor in JenaValve and a partner at Atlas Venture, a life-sciences and technology venture capital firm in Waltham, Massachusetts. “It does increase the likelihood of someone wanting to acquire in this space.”

Medtronic, which does not break out sales of individual products, said more than 12,000 CoreValve devices have been in 35 countries. Medtronic received Food and Drug Administration approval on Oct. 15 to begin U.S. clinical studies of its CoreValve device.

To contact the reporter on this story: David Olmos in San Francisco at

To contact the editor responsible for this story: Reg Gale at

To: richardred who wrote (2462)12/15/2010 11:21:29 AM
From: richardred  Read Replies (1) | Respond to of 6275
Novartis Buys Rest of Alcon for $12.9 Billion


ZURICH—Novartis AG Wednesday paved the way to take full ownership of Alcon Inc. after sweetening its original share offer with a cash component, ending a drawn-out battle to acquire the remaining 23% of the U.S. eye-care company in a deal worth $12.9 billion.

The full acquisition—intended to help Novartis capitalize on an eye-care market that is expected to grow faster than pharmaceuticals in coming years—will now cost Novartis about $51.6 billion, making it Switzerland's biggest takeover so far and one of the biggest ever in the industry.

Under the new agreement, Novartis will guarantee minority shareholders $168 per share. The number of Novartis shares it's offering hasn't changed, and still stands at 2.8. When the offer to the public shareholders was made at the beginning of the year, it was valued at about $153 per share, but Novartis stock has risen since then. The new $168-a-share offer equals the average of what Novartis previously paid Nestle SA for two chunks of Alcon totaling 77% of the company. Novartis paid Nestle $38.7 billion in total.

Novartis said it will add cash if necessary to guarantee a value of $168 per share should its stock drop. If the value of 2.8 Novartis shares is more than $168, then the number of Novartis shares will be reduced accordingly. When Novartis made its initial bid to minority shareholders, they rejected it as too low.

Minority shareholders meanwhile pressed Novartis to provide them with some sort of cash buffer that would help shield them if Novartis's share price were to fall in value.

Alcon's independent board of directors, which backs the new deal, had previously threatened possible litigation and had opened a $50 million trust to finance potential lawsuits.

"With this step Novartis takes full ownership, becoming the global leader in eye care, a rapidly expanding, innovative platform based on the growing needs of an aging population," Novartis chairman Daniel Vasella said in a statement.

The full buyout reflects Novartis's drive to broaden its product portfolio and help it tap the growing eye-care market. Alcon's inclusion will add about $6.5 billion in additional sales to Novartis, which last year had revenue of about $44 billion. The buyout should also help the Swiss company mitigate a steep sales drop from lost patent protection for its two biggest medicines, heart drug Diovan and cancer drug Glivec.

Novartis predicts that fully acquiring Alcon will help it create annual synergies of about $300 million, up from $200 million that would have resulted from a partial acquisition. Also, owning only 77% of the company would have forced it to run Alcon at arm's length.

Novartis shares traded 6.6% higher in Zurich on Wednesday, up 3.20 Swiss francs at 56.80 francs—still valuing the stock portion of the bid at marginally below the guaranteed value. Shares of Alcon had closed at $162.43 on the New York Stock Exchange Tuesday and are likely to move toward $168 on Wednesday.