The Health Care M&A Monthly: September’s M&A Market–

Seventy Deals Announced Worth $5.4 Billion
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The month of September posted a total of 70 mergers and acquisitions in the health care industry, as compared with 78 in the year-ago period, September 2006. Forty-two deals, or 60% of the total M&A activity, took place in the health care technology segment. The remaining 28 deals, or 40% of the total, were in the health care services sectors.
Based on prices available at press time, a total of $5.4 billion was committed to fund this activity, with the technology sectors accounting for $4.9 billion, or 91% of the total. Just one deal, in the Pharmaceutical sector, came with a price tag of over $1.0 billion. By comparison, September 2006 saw a total of $32.0 billion committed to finance health care M&A, with a total of five billion-dollar deals. If we strip away four of those high-profile deals, ones that involved European biotech and pharma companies, so there remains one billion-dollar deal, as in September 2007, the combined value of the remaining 74 deals was $5.5 billion, not so far off this year’s mark.
Among individual sectors, Pharmaceuticals posted 19 transactions, or a whopping 27% of the month’s deal volume. Not surprisingly, this sector also accounted for $3.9 billion, or 72% of the month’s dollar volume. The second most active sector was Medical Devices, with 12 deals worth a combined $648.5 million, which was followed by Biotechnology in third place with eight deals and $369.3 million in total dollars committed. Among the services sectors, Managed Care posted four deals worth a combined total of $273.7 million. While Hospitals posted eight deals, including several mergers, their combined purchase price was $1.00. Please refer to the table on the bottom of page 4 of this month’s issue. And for the first time in memory, the Long-Term Care sector posted a single deal, one worth $88.0 million. These latter two results are aberrations from what we have come to expect, and we assume they will correct themselves as more information becomes available. Still, such aberrations give us reason to pause and we find ourselves now more inclined than at any time in the past four years to summon up that old chestnut of a Chinese curse, “May you live in interesting times.” But not just yet.
 
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