logo
  Join        Login             Stock Quote

How Bayer Could Benefit From Potential Warner Chilcott Buyout

 May 01, 2012 02:48 PM
 


(By Mani) Warner Chilcott plc (Nasdaq:WCRX) said Monday that it is exploring a broad range of strategic alternatives to enhance shareholder value, which include preliminary discussions with potential bidders. Goldman Sachs is the financial adviser to the company in this regard.

The announcement came after The Times (of London) reported last Friday that Germany's Bayer AG could offer as much as $32 per share for Warner Chilcott, implying a premium of 70 percent over Warner Chilcott's closing price on March 27.

Ireland-based Warner Chilcott is a leading specialty pharmaceutical company currently focused on the women's healthcare, gastroenterology, dermatology and urology segments of the branded pharmaceuticals market, primarily in North America.

[Related -Forest Laboratories, Inc. (NYSE:FRX): Should Astrazeneca Plc Buy Forest Labs?]

The acquisition of Procter & Gamble's global branded pharmaceuticals business in October 2009 transformed Warner Chilcott into a global pharmaceuticals company with significant scale and geographic reach.

"Assuming a (conservative) fundamental share value of $24, we have tried to gauge the premium a bidder would be willing to pay for Warner Chilcott. We estimate a range of $27- $32 per share could be entirely feasible," RBC Capital Market analyst Shibani Malhotra wrote in a note to clients.

A potential bidder could remove 10 percent to 30 percent of Warner Chilcott's total selling, general and administrative and R&D costs. Based on increased visibility into the pipeline, would recognize an incremental 50-125 percent of R&D in value for this. The bidder would be willing to give 50 percent of the synergy value and 100 percent of incremental recognized pipeline value to Warner Chilcott shareholders

[Related -Hologic Inc. (HOLX) Q3 Earnings Preview: New, Old Management With A New Tone?]

Malhotra said Bayer could be looking to increase its SG&A infrastructure in the US. It appears that Bayer's pharmaceuticals commercial infrastructure is mostly ex-US whereas Warner Chilcott has a strong US presence.

In addition, Bayer's global reach offers a meaningful opportunity to market Warner Chilcott's portfolio globally, particularly in emerging markets. As of March 31, Bayer has about 1.31 billion Euros in cash and cash equivalents.

With a strong cash balance, Bayer could take Warner Chilcott's oral contraceptive franchise as well as products such as Asacol global. In 2011, Asacol generated $743 million in sales.

Bayer could be interested in Warner Chilcott's oral contraceptive portfolio given the issues with its own YAZ franchise.


Next Page >>12
iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageHow the Chinese Slowdown Will Impact Your Investments

Most countries would find a quarterly growth rate of 7.3% a cause for a read on...

article imageHow To Profit From Foreign Investment In Real Estate

Though investors don't always capitalize on it, history has a way of repeating itself. In fact, when I saw read on...

article imageAnother Round Of Upbeat US Macro Reports

The US economy grew faster than expected in this year’s third quarter, according to this morning’s read on...

article imageDistinguishing The Fed's Securities Purchases From Monetary Expansion

There has been a bit of confusion about what today's FOMC announcement means with respect to Quantitative read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Merger Arbitrage Mondays – June 3, 2013
More Articles on: Medical



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.