Novartis leads the list with its $41 billion buy of Alcon. [© James Steidl - Fotolia.com]
The mega-mergers of 2009 did not continue into 2010. While the three biggest acquisitions in 2009 each had a price tag of more than $40 billion, only 2010’s top purchase got above that mark. The only other mega takeover deal for the year is still being haggled.
A look at 2010’s buyouts that crossed the $1billion mark reveals interesting similarities with major acquisitions from past years. Prior finalists make a repeat appearance, and most entities that have reported consolidation say that the mergers have been positive. Read on for all the details and to find out how things are panning out for the companies.
Like 2009’s top ranker—Pfizer’s bid for Wyeth—Novartis made its play for eyecare company Alcon in January. Four days into the new year Novartis offered about $39.3 billion for the 75% of Alcon it didn’t already own; this makes it similar to another 2009 top ranker—partial-owner Roche taking full control of Genentech. Interestingly, Novartis’ deal for the initial 25% of Alcon was the second highest acquisition of 2008.
Novartis first managed to buy another 52% of Alcon, paying $28.1 billion, or $180 per share. The second part of the offer, valued at about $153 per share, was struck down. On December 15, 2010, Novartis finally bumped up its price to $168 per share, or $12.9 billion in total, for the remaining 23% of Alcon. For its third quarter financial results, which included 77% of Alcon, Alcon’s sales contributed $617 million to total third quarter sales. Core operating income for the first nine months, which excludes exceptional items and amortization of intangible assets, rose 32% to $10.8 billion, with Alcon contributing 3% points.
Sanofi-aventis has not closed this deal and cannot yet claim the number two spot for 2010. The company first made its $18.5 billion offer on July 29, hoping to gain a strong foothold in biologics for rare genetic diseases. The deal marks one of the few blockbuster acquisitions focused on a biotherapeutic company.
It started with a letter to Genzyme’s board, then the rumor-mill began to churn, and on August 29, sanofi-aventis made its bid public. On December 14, the firm was forced to extend its tender offer after acquiring less than 1% of Genzyme shares. While both sides have been playing hardball, they will likely have to compromise. It has been about five months since sanofi-aventis made its move, and Genzyme cannot be holding out for a higher bidder. Sanofi-aventis, on the other hand, will probably have to up its price at least enough for Genzyme to open its books.
Merck KGaA/Millipore—$5.2 billion
On March 1, 2010, Merck KGaA proposed to take over Millipore for a whopping €5.3 billion, securing a rare top spot for a life science tools and service provider among the big mergers. The deal closed on July 15 at a price of €5.2 billion, which at the time translated to $7 billion. Merck paid $107 per share, a 13% premium over Millipore’s last closing price before the deal was reported.
The acquisition created the new EMD Millipore division, known as Merck Millipore outside the U.S. and Canada. Merck says that EMD Millipore is the third largest investor in biotech tools and R&D. The unit’s Q3 revenues rose to €574 million. Of this sum, €314 million is attributable to the new acquisition. Merck’s total Q3 revenues increased 25% to a record €2.448 billion from €1.95 billion in last year’s Q3 quarter, boosted by the Millipore takeover, which accounted for 16 percentage points.
Teva Pharmaceutical/Ratiopharm—€3.625 billion
Teva Pharmaceutical bought ratiopharm on March 18 in a deal valued at €3.625 billion, or roughly $4.96 billion at the time of the announcement. Teva was also a big spender in 2008 with its $7.46 billion buy of Barr Pharmaceuticals, while the year before Mylan Laboratories beat Teva out for Merck Generics, securing number three in the 2007 wrap-up.
Ratiopharm is reportedly Germany’s second largest generics producer and has know-how in biosimilars and a portfolio of 500 molecules in over 10,000 presentation forms marketed in 26 countries. Acquiring this company allowed Teva to return to top 10 list. Teva’s Q3 European sales totaled $1.001 billion, accounting for 24% of total sales and representing an increase of 21% compared to Q3 2009. The firm attributed the growth to increased generic sales in Germany, Spain, Italy, and France due substantially to the consolidation of ratiopharm.
Astellas Pharma/OSI Pharmaceuticals—$4 billion
This deal makes Astellas Pharma 2010’s Japanese representative in our list of highest acquisition spenders. While 2009’s rankings did not showcase a Japanese company, the previous two years did. In 2008, Takeda Pharmaceutical took the third spot with its $8.8 billion purchase of Millennium Pharmaceuticals, and in 2007, Eisai came in at number four with a buyout of MGI Pharma for about $3.9 billion.
Astellas, Takeda, and Eisai have another thing in common. Each ponied up the money to bolster cancer franchises and their U.S. presence. The OSI deal gave Astellas access to Tarceva, approved for non-small-cell lung and pancreatic cancers. The drug achieved worldwide sales of some $1.2 billion in 2009, which brought OSI revenues of $359 million; the drug is marketed with Roche.
Pfizer/King Pharmaceuticals—$3.6 billion
Pfizer paid $3.6 billion for King Pharmaceuticals, a far cry from its 2009 acquisition of Wyeth in which it shelled out $68 billion. Pfizer, like Novartis, is no stranger to big mergers; in 2000 it ponied up $89 billion for Warner Lambert.
About two months after the King acquisition, on December 5, 2010, Jeffrey Kindler stepped down as CEO of Pfizer, a post he enjoyed for over four years. Pfizer’s purchase of King is a relatively safe way for the firm to gain revenues since the company has a portfolio of marketed specialty pharmaceuticals including drugs to treat pain, an area Pfizer is investing in more.
Honorable Mention—Above $1 billion
Grifols acquired Talecris, a Spain-based group of firms developing plasma derivatives, for $3.4 billion. Celgene paid $2.9 billion for Abraxis BioScience, giving it an approved breast cancer treatment and a nanotechnology drug delivery platform.
Thermo Fisher Scientific continued picking up companies this year to pad its analytical technologies as well as product and services segments, the most significant being the $2.1 billion purchase of Dionex.
Johnson & Johnson decided to buy the roughly 82% of Crucell it doesn’t own offering €1.75 billion (about $2.35 billion). Charles River inked a $1.6 billion deal to take over Chinese CRO WuXi.