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 May
2008 issue
Merger Magic Returns--
Four Billion-Dollar Deals Jumpstart April’s M&A Market
April saw the announcement of four
billion-dollar deals in the health care technology sectors worth a combined
total of $50.9 billion.
Even if these four mega-deals are ignored, the health care M&A market,
particularly the middle market segment, continues to offer investors good
opportunities.
...
With An Eye On
The Future--
Novartis Buys Alcon, Builds Eye Care In $39.0 Billion Deal
Novartis struck a two-part deal with Nestle to acquire a majority of eye
care giant Alcon for $39.0 billion. This constitutes the largest Medical
Device deal ever announced.
...
In the Departments
Services
-Health Care Services
-Deal Summaries
-Additional Transactions
-Transaction Updates
Technology
-Health Care Technology
-Deal Summaries
-Additional Transactions
-Transaction Updates
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Articles Archive
Companies Mentioned in this issue:
May 2008
A
Abbott Laboratories p10
Abraaj Capital p4
Accelerated Rehabilitation Centers p7
Accuro Healthcare Solutions p15
Agensys p10
Al Borg Laboratory p4
Alcon, Inc. p1
Alnylam Pharmaceuticals p10
Apax Partners, L.P. p10
Astellas Pharma p10
B
Banc of America Securities Canada Co. p16
Bank of America Corp. p16
Blackstone p8
BlueCross BlueShield of Tennessee p15
Brookwood Medical Center p4
C
Cain Brothers and Company p15
Capella Healthcare p3
Carolina Care Plan p4
Center for Behavioral Health p3
Centerstone p3
Children’s Heart Center p4
Chiron p9
Chiropractic Alliance Corporation of Tampa p4
Church & Dwight Co. p16
Citi p15
Community Health Systems p3
Coty p16
Cowen and Company p16
Culpeper Medical Associates p3
Culpeper Regional Hospital p3
D
Del Laboratories p16
Del Pharmaceuticals p16
Deutsche Bank Securities p15
Diagna Radiology p4
Draxis Health p16
E
Eisai Co. p10
Empire Health System p3
EP MedSystems p16
eScription p15
Europa Apotheek p8
F
Forticell Bioscience p16
Fulcrum Ventures p3
G
Gemino Healthcare Finance p3
Gerber p1
GlaxoSmithKline p10
Goldman, Sachs & Co. p10
Goldman Sachs Urban Investment Group p7
Gryphon Investors p7
GTCR Golder Rauner, LLC p3
H
Haas Wheat & Partners p7
Harpeth Companies, LLC p3
Harris William & Co. p7
Health Management Associates p3
HealthSouth Corp. p7
HomeChoice Health Services p3
Houlihan Lokey p7
I
Isis Pharmaceuticals p10
Ista Pharmaceuticals p16
J
J.P. Morgan Chase & Co. p16
JP Morgan Securities p16
Jubilant Organosys p16
K
Kelso & Co. p16
Kinetic Concepts p15
L
Lazard p16
Lehman Brothers p15
LifeCell Corporation p15
M
MedAssets p15
Medco Health Solutions p8
Medical Mutual of Ohio p4
Mediplex/Cumberland Rehabilitation, LP. p7
Merck p9
Merrill Lynch & Co. p16
MGI Pharma p10
Millennium Pharmaceuticals p10
Morgan Stanley p8
N
Nestle SA p1
Norris Cancer Hospital p3
Norwood Clinic p4
Novant Health p3
Novartis AG p1
Nuance Communications p15
Nursefinders p7
O
OccuSport Physical Therapy p7
P
Palmetto Health p4
Pediatrix Medical Group p4
Pharos Capital Group, LLC p7
Physicians Medical Center Carraway p4
Premier Health Systems p4
Prism Health Networks p4
Prudential Capital p3
Q
Quinco Behavioral Health Systems p3
R
RBC Capital Markets p14
Regulus Therapeutics p10
Resources On Call p7
S
Sandpiper Bay p4
SIA International Ltd. p7
Sirtis Pharmaceuticals p16
Sisters of Charity Providence Hospitals p4
Skilled Healthcare Group p4
SSM Health Care p4
St. Francis Hospital p4
St. Jude Medical p16
Summer Street Capital Partners, LLC p4
SunCrest Healthcare p3
T
Takeda Pharmaceutical Co. p10
TAP p10
Tenet Healthcare Corp. p3
The Regence Group p15
The Rehabilitation Hospital of South Jersey p7
The TriZetto Group p10
TPG Capital p7
TPMS p15
U
UBS Investment Bank p10, p15
University of Southern California p3
University of Virginia Medical Center p3
USC University Hospital p3
V
Virtual Radiologic Corp. p4
W
Warburg Pincus p15
Waterfront Inn p4
Welsh, Carson, Anderson & Stowe p15
William Blair & Co. p15
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Merger Magic Returns--
Four Billion-Dollar Deals Jumpstart April’s
M&A Market
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article to a friend
Email Editor
The magic of Merger Monday made a brief but spectacular reappearance
during the second week of April, recalling those heady days when any
company was considered fair game and money was no object. The five-day
period from the 7th through the 11th of the month saw the appearance of
four billion-dollar deals, with two announced appropriately enough on
Monday. Two were in Medical Devices, one in Biotechnology and one in
e-Health. Given the current uncertainty in the financial and credit
markets, the health care M&A market has proven itself to be quite
resilient with a total of 83 deals announced during the month. The four
health care technology sectors account for 47 deals, or 57% of the month’s
total, with the nine health care services sectors accounting for the
remaining 36 transactions.
Based on prices revealed to date, a total of $57.0 billion
was committed to finance April’s M&A activity in the health care industry.
The combined dollar value of the four billion-dollar deals was a robust
$50.9 billion, or 89% of the total amount spent to fund April’s 83 deals.
Eighteen deals were announced in the middle market with prices ranging
from $100.0 million up to $1.0 billion; their combined value was $5.8
billion. Finally, 14 deals were announced with prices ranging from
$300,000 to $99.9 million; their combined value was $330.5 million. These
figures suggest that, despite the spectacular sums being dispensed in the
somewhat fickle billion-dollar market segment, the middle market of the
health care M&A industry remains the focus of much deal making.
Due to the presence of four mega-deals in the mix, the
average price per transaction weighed in at a whopping $1.54 billion while
the corresponding median was $165.0 million. These figures stand well
above the whole-year 2007 figures of $312.0 million and $35.0 million,
respectively. Recognizing that we are comparing apples to apple slices
here, we expect the distorting effect of April’s spike in prices to be
moderated as more usual deal activity accumulates during the year.
Despite rumors of its premature demise, private equity
figured in April’s health care M&A market. Six financial buyers, five of
which were private equity shops, announced acquisitions in April, totaling
$2.567 billion, or roughly 5% of the month’s total. The remaining 95% was
committed by the strategic buyers who have always constituted the lion’s
share of acquirers in health care deals. What appears to be gone from the
market is the knee-jerk LBO where the buyer loads a target up with debt,
siphons off the interest, sells off the real estate or financially weaker
units and generally remains aloof from operations until it hits upon an
exit strategy that principally benefits investors. Leveraged buyouts are
still in evidence, to be sure, but PEGs are taking care to fine tune their
investments to meet the specific needs of the target companies. More
often, they are now making equity investments in healthy companies with
good growth potential and hitching their fortunes to that of the company;
consequently, they are working more closely with management to grow a
solid business.
We could not expect the market to maintain its brisk pace
through the rest of the month. But the fact that deal makers were able to
craft these mega-transactions in the current market should give investors
some comfort that their faith and dollars are not misplaced in health
care. |
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