Yesterday was quite special. There were talks about three mergers going on while the markets was open.
It was reported that an agreement about the Roche-Genentech deal is moving closer. From the current 93/share bid by the Swiss drugmaker Roche, the price could potentially move up to 100. Remember that Genentech initially wanted the shares to be sold at 112 each but it seems Roche wouldn’t budge. At the end of the day, the price that was floating was $95, some 2% above the 93 that was reported over the weekend. This deal is more of done than not. Just a little but more tinkering with the price and the talks could be done soon. Very, very soon.
That was all the update I expected to hear upon waking up. But voila, there was another one. And it was similarly from the biotech world. This time, Merck has declared its interest to buy New Jersey firm Schering-Plough for a $41.1bn deal. The agreed upon cash-and-stock deal, which values the latter firm’s shares at $23.61 each, is a 34% premium on Schering’s Mar. 6 closing price. Merck’s CEO Richard Clark said of the deal, “The combined company will benefit from a formidable research and development pipeline, a significantly broader portfolio of medicines and an expanded presence in key international markets, particularly high-growth emerging markets.” The two firms already have a partnership for cholesterol drugs Vytorin and Zetia. But Schering also has a deal with JNJ to market drugs outside the US, which might be endangered if the acquisition pushes through. CEO Clark still defends, “We believe the transaction is structured so that Schering-Plough’s rights are not affected by the merger,” Clark said.
Next. Rohm and Haas and Dow Chemicals. The saga is finally heading to a close. Tonight, the Financial Times reports that the two firms have reached an agreement and Dow is finally pushing through with the the deal it almost abandoned. But I suppose the fear of the mess of the courts forced it to make a U-turn. The initial price of $78 per share will be maintained but it is to be split between $63 of cash and the remaining in preferred shares. The FT reports that Paulson & Co, an investment firm, and a group of trusts controlled by the Haas family will buy $2.5bn of preferred equity in Dow. The Haas trusts, which own a combined 32 per cent of Rohm and Haas, have agreed to buy another $500m of Dow’s equity if Dow exercises that option. The acquiring company said the proceeds of the issuances will be used to cut down the debt to be taken from the $12.5bn bridge loan it has secured from a group of banks. Taking in more from the bridge loan could mean rating downgrade for Dow. Berkshire Hathaway and the Kuwait Investment Authority will contribute $3bn and $1bn, respectively, of convertible preferred equity to help finance the deal- agreed when the transaction was first announced. Now it seems everyone is finally happy.
Last one, this time a merger involving three parties. Agrium (NYSE: AG), CF Industries Holdings (NYSE: CF), and Terra Industries (NYSE: TRA). So here’s the story: CF made a bid for Terra, which Terra’s shareholders are rejecting. Then AG made a bid for CF worth $3.6bn conditional on CF dropping its bid for TRA, but CF also rejects. Now what CF did was revise its offer to TRA. As long as CF’s shares trade above Friday’s (March 6) closing price of $60.59, TRA shareholders would get at least $27.50 a share. Illinois-based CF’s earlier offer was 0.4235 of its own shares for each Terra share. The firm changed its exchange ratio to a range of not less than 0.4129 of a CF share and not more than 0.4539 of a share.
I wonder who’s next in line tomorrow?