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June 24, 2013 Issue:
Recent Health Care M&A Deals
Medical Devices
Acquirer
Target
Price
Techne Corporation
Bionostics Holdings Limited
$104 million
MicoPort Medical B.V.
Wright’s OrthoRecon business
$290 million
Pharmaceuticals
Acquirer
Target
Price
Eli Lilly
TT-401
$14 million
Perrigo Company
Ophthalmic Product Portfolio
$93 million
Johnson & Johnson
Aragon Pharmaceuticals, Inc.
$650 million
Services Deal of the Week
It’s not often we see a deal for standalone rehabilitation facilities. Only four deals have been made public in 2013, just saying. So it behooves a mention when two facilities change hands, which is just what happened on June 20th, when Select Medical of Mechanicsburg, Pennsylvania announced it had purchased an interest in two inpatient rehabilitation facilities in San Antonio, Texas and Scottsdale, Arizona from GlobalRehab Management LLC. The 50-bed Scottsdale facility is a joint venture with Scottsdale Healthcare, and joins Select Medical’s Phoenix area network of three Select Specialty Hospitals and 12 Select Physical Therapy outpatient clinics. The former GlobalRehab facility has been renamed Select Rehabilitation Hospital of San Antonio, and operates 42 beds. The San Antonio market includes one Select Specialty Hospital and two Select Physical Therapy outpatient clinics…Want to read more news? Click here for a free trial to The Health Care M&A Information Source and download the current issue today.
Charted Territory
Transactions in the Hospital category are notoriously fragile. So far in 2013, we’ve seen 33 M&A transactions announced in the Hospital space, for a total of nearly $1.51 billion. Most hospital deals do not come with disclosed prices, so it is not surprising that in all of 2012, the 107 announced transactions totaled all of $2.25 billion. Just last month, one of the most high-profile mergers of recent years was called off, between Henry Ford Health System in Detroit and its local competitor, Beaumont Health System. Earlier this spring, PeaceHealth and Catholic Health Initiatives called off merger talks—and we’ve adjusted our database accordingly. Looking back over the last five years, it seems unlikely 2013 will be a breakout year. The push toward becoming Accountable Care Organizations is forcing some hospitals to spend more time and energy on forging affiliations and partnerships with physician medical groups, long-term care facilities, home health and hospice companies, and local rehabilitation and behavioral health care entities.
Hospital M&A Transactions, 2008 to 2012
2012
2011
2010
2009
2008
Deal volume
107
93
76
50
60
% change
15.05%
22.37%
52.00%
-16.67%
0.00%
Deal value
$2.25b
$8.30b
$10.57b
$2.09b
$2.58b
% change
-72.84%
-21.02%
403.48%
-19.07%
-72.12%
Note: Figures are subject to rounding. Source: Irving Levin Associates, Inc., June 2013
Want to read more news? Click here for a free trial to The Health Care M&A Information Source and download the current issue today
Technology Deal of the Week
The pharma floodgates have opened and the deals just keep on coming. On June 17, Johnson & Johnson (NYSE: JNJ) announced its acquisition of Aragon Pharmaceuticals, Inc., a drug discovery and development company focused on treatments for hormonally-driven cancers. JNJ will make a cash payment of $650 million, plus additional contingent payments of up to $350 million based on achievement of certain milestones. Aragon’s androgen receptor antagonist program, the company’s lead product candidate now in Phase 2 development, was the real prize. Aragon will transfer all assets other than its androgen receptor antagonist program to a newly formed company, which will be spun off prior to the closing……Want to read more news? Click here for a free trial to The Health Care M&A Information Source and download the current issue today.
In the Pipeline
On June 19, biotechnology company bluebird bio, Inc.—no, that’s not a typo, they really spell it that way—began trading on the NASDAQ Global Select Market under the ticker BLUE. The IPO price of its 5,941,176 shares of common stock was $17.00 per share, before underwriting discounts. Shares were trading above $25.00 the next day, giving the company a market cap of more than $613 million. bluebird uses gene therapy to treat patients with severe genetic and orphan diseases. It has two clinical-stage products in development for childhood cerebral adrenoleukodystrophy (CCALD) and beta-thalassemia/sickle cell disease, and a preclinical onocology program in partnership with Celegene (NASDAQ: CELG). J.P. Morgan Securities LLC and BofA Merrill Lynch acted as joint book-running managers for the offering. Cowen and Company acted as lead manager and Canaccord Genuity Inc., and Wedbush PacGrow Life Sciences were co-managers….Want to read more news? Click here for a free trial to The Health Care M&A Information Source and download the current issue today.
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Upcoming Interactive M&A Webcast:
Tax-Exempt Entities: Buying, Selling and Valuing
Thursday, August 8th, 2013, 1:00 pm ET
The not-for-profit merger and acquisition market — specifically not-for-profit health care businesses that acquire other not-for-profit health care businesses — is rapidly and continually evolving. Not-for-profit health care transactions are found primarily in what we identify as the health care services segment — hospitals and long-term care, in particular —while a handful are found in the allied health care technology segment comprised of the biotech, e-health, medical device and pharmaceutical sectors. Not-for-profits typically raise capital in different fashions and from different sources than for-profit entities. Our panel will discuss what drives this market, where and when to buy or sell, who’s buying what and what influences the valuation of the various not-for-profit businesses that make up this sector.
Go to http://www.levinassociates.com/conferences/1308-online-conference or call 800-248-1668 to register.
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