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Week ending December 12, 2014:
Recent Health Care M&A Deals
Acquirer
Target
Price
Managed Care
Blue Shield of California
Care1st
N/A
Pharmaceuticals
La Jolla Pharmaceutical Company.
License to intellectual property
N/A
Merck & Co.
Cubist Pharmaceuticals
$9.5 billion
Physician Medical Groups
IPC The Hospitalist Company
North Carolina Elderly Psychiatric Services
N/A
Merck Buys Cubist, No Regrets
The big deal of last week almost turned into the biggest non-deal of the week. Merck (NYSE: MRK), known as MSD outside the United States and Canada, announced it would pay a total of $9.5 billion for Cubist Pharmaceuticals (NASDAQ: CBST), the specialty antibiotics maker. The price consists of $8.4 billion in cash, representing $102 per share of Cubist, and the assumption of $1.1 billion in net debt, based on projected cash balances. The very next day, the U.S. District Court for the District of Delaware upheld one patent on Cubist’s lead drug, Cubicin, but invalidated four others. The decision is subject to appeal, and Merck stated it will go forward with the acquisition, although Cubicin’s patent expires on June 15, 2016. That erases a good chunk of future earnings Merck was counting on, but there’s always that appeal.
The Year in Billion-Dollar Deals
With two weeks left to go in 2014, we’re already counting the number of billion-dollar deals announced, and still active. Given how busy this year has been in health care M&A, we’re expecting a few more between now and New Year’s Eve, but here’s a quick look at where we stand in mid December. So far we have 46 (forty-six) deals with prices at or exceeding $1 billion. They make up only 4% of the 1,161 transactions we’ve captured to date. But those 46 deals tally up to $325.5 billion, and make up 85% of the total spending, so far. Can’t wait for New Year’s Eve.
Top 10 Healthcare Transactions in 2014
Rank
Acquirer
Target
Price
1
Actavis plc
Allergan Inc.
$66.0 billion
2
Medtronic, Inc.
Covidien plc
$42.9 billion
3
Actavis plc
Forest Labs
$25.0 billion
4
Merck & Co.
Sigma-Aldrich Corp.
$17.0 billion
5
Novartis Corp.
GSK oncology business
$16.0 billion
6
Bayer AG
Merck’s OTC business
$14.2 billion
7
Zimmer Holdings
Biomet, Inc.
$13.4 billion
8
BD
CareFusion Copr.
$12.2 billion
9
Merck & Co.
Cubist Pharmaceuticals
$9.5 billion
10
Roche
InterMune, Inc.
$8.3 billion
Source: The Health Care M&A Information Source, December 12, 2014
Blue Shield of California Acquires Care1st Health Plan
Care1st Health Plan, a provider-funded managed care company based in Los Angeles County, has agreed to be acquired by Blue Shield of California in an all-cash transaction. Beyond that, financial terms were not disclosed. A lot of hoops need to be jumped through, of course, as the deal is subject to fulfillment of various conditions, including receipt of regulatory approvals from the states of California, Arizona and Texas, as well as clearances from certain federal agencies. Care1st serves 473,000 Medicaid/Medi-Cal members; 46,000 Medicare members and 5,300 members dually eligible for both programs. After the deal closes in the second half of 2015, Care1st will become part of Blue Shield’s not-for-profit organization.
CardioKinetix Gets $50 Million Financing
CardioKinetix, Inc., a medical device company specializing in a catheter-based treatment for heart failure, completed a $50 million financing led by Edwards Lifesciences Corporation, with participation from existing investors U.S. Venture Partners, Tekla Healthcare Investors (NYSE: HQH) Tekla Life Sciences Investors (NYSE: HQL), SV Life Sciences, Panorama Capital, New Leaf Venture Partners and Lexington Private Equity. With all those investors on board, CardioKinetix entered into a separate agreement that give Edwards Lifesciences the right to acquire CardioKinetix, based on future regulatory milestones. The financing provides the necessary capital to complete the Parachute IV randomized pivotal clinical trial of the Parachute Ventricular Partitioning Device for the treatment of heart failure. Cooley LLP served as legal counsel to CardioKinetix………….Click here for a free trial to The Health Care M&A Information Source and download the current issue today.
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