The Health Care M&A Monthly: Brisk October Follows Slow Third Quarter-

Heaviest M&A Deal Volume In Months Greets The Election

Just when we thought the health care M&A market was poised for a mini-recession, we had our own little October surprise with a flurry of announced transactions spread fairly evenly among the technology (51 deals) and services (53 deals) segments.  It has been rare to have a single month with more than 100 transactions announced, but the overwhelming majority of the acquisitions, across both segments, were small in dollar value.

In the technology side of the business, the deal activity was pretty consistent among medical devices (12), biotechnology (14) and pharmaceuticals (18), but one of the more active sectors of the year, e-health, sort of fell flat in October with just seven deals, with revealed prices below $8.0 million.  The total dollar volume for the technology sector, at just over $4.0 billion, was low compared with most months, and more than half of that came from the acquisition of PSS World Medical (NASDAQ: PSSI) by McKesson Corporation (NYSE: MCK) for $2.1 billion.  McKesson is paying $29 per share, representing a 34% premium, and the price comes to 1.0x revenues and 12.x EBITDA. The company markets and distributes medical supplies and equipment to office based physicians and long term care providers. 

The next three largest transactions were in the pharmaceutical sector, with Pfizer (NYSE: PFE) agreeing to pay $255 million for privately-owned NextWave Pharmaceuticals after paying a $20 million option price in the second quarter. NextWave specializes in products for the treatment of ADHD and related CNS disorders, and the sellers may receive up to $425 million in milestone payments if things work out.

Netherlands-based Vion N.V., has agreed to sell Banner Pharmacaps to Patheon, Inc. (TSX: PTI) for $255 million.  Banner is the world’s second largest pharmaceutical business focused on softgel formulations for the over-the-counter, prescription and nutritional consumer products markets.  UBS Securities represented Patheon.  In the next largest transaction, Merck & Co. (NYSE MRK) is paying $143.0 million upfront to acquire the exclusive licensing agreement for Germany-based AiCuris’ portfolio of investigational medicines targeting  Human Cytomegalovirus (HCMV) for the treatment and prevention of HCMV infection in transplant recipients. In addition to the upfront payment, there are up to EUR 332.5 million in potential milestone payments.........Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today