Another Manic Monday…of Mergers, That Is
By Taryn Cooper, at 12:13 pm on March 1st, 2010I have to admit, after working for years on an investment banking floor, I still get riled up on Monday mornings when deals are announced. Oh boy, were they announced today!
Out of four high-ish profile announcements, AIG selling its Asian unit to Prudential plc, Merck KGaA buying life-science company Millipore, Astellas Pharma submitted an unsolicited bid for OSI Pharmaceuticals, and MSCI agreed to acquire proxy advisory firm RiskMetrics. Those four deals along provided about $50 billion in transaction value to the league tables this morning.
The AIG deal was valued $35.5 billion. I’m not certain what kind of sign this is for AIG — garbage in, garbage out? Whatever the case, $35.5 billion is not something to shake a stick, whether or not this is perceived to be a strong subsidiary that they could get some value from.
What interests me are the pharmaceutical and healthcare consolidations, usually signifying a “healthier” economy (not “healthy” just “healthier” by most standards). When you see consolidations in this industry, “they” will come (meaning: investors, driving up the markets!). In fact, as we speak, drug stocks are reported to be “stoked” by this merger activity.
An unsolicited bid, which is just a nice way of saying “hostile” (though technically, a hostile bid is when the target formally rejects the acquirer’s offer), leads me the acquisition of proxy advisory firm RiskMetrics. RiskMetrics is a great tool to view how strong companies are, regarding their board and internal structure, who may be vulnerable to unsolicited or hostile targeted bids. MSCI is an interesting acquirer of this set as they are index focused and potentially looking to build out their index portfolio with a purchase of Russell Investments after a failed bid for the famed Dow Jones indexes.
All in all, a healthy Merger Monday is a good sign of things to come. That and sun after a particularly blustery weekend!
