To some analysts, Valeant Pharmaceuticals' offer for Cephalon makes it official: The pharma industry is living in a new era of hostile acquisitions. On the heels of Sanofi-Aventis' hostile bid for Genzyme--which ended in a friendly deal that closed today--Valeant's offer could inspire other, similar bids, they say.
According to the Financial Times, a look at the numbers shows that dealmaking tactics have changed. There were only one to three hostile bids per year in pharma during 2000 to 2004. Since 2006, more than a third of all buyout offers were hostile or unsolicited. One reason, according to an FT source: "[I]t's cheaper to go hostile than friendly."
"The situation is reminiscent of the 1980s corporate raiding of the industrial sector," Bernstein Research's Ronnie Gal wrote in an investor note (as quoted by the FT). Gal listed a dozen potential bid targets, including generics maker Impax, antibiotics specialist Cubist, and Big Pharma's Eli Lilly and Bristol-Myers Squibb. "The laws of economics dictate that others will soon replicate this approach," he says.
- read the FT story
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