How rewarding it is for the people of America is a different issue, but here the objective is rescuing the financial system, in any way possible. US has seen a number of distress sales, like that of Merrill Lynch by Bank of America for $44.4 billion and Bear Stearns by JP Morgan for $236 million (later revised to $1 billion). As the credit malaise spread, other big ticket deals happened globally, including Lloyds TSB’s acquisition of HBOS ($21.9 billion), Commerzbank’s take over of Dresdner Bank ($14.4 billion) and Westpac Banking’s buyout of St. George Bank ($18.5 billion). UBS also sold off its subprime and Alt-A portfolio to BlackRock for $15 billion. India also saw a major banking deal when HDFC acquired Centurian Bank of Punjab for Rs.95.1 billion, and more could follow, but that has less to do with the credit crisis and more to do with the imminent consolidation in Indian banking.
Mining is another sector that seems ripe for consolidation. Coming back to the largest pre-marital break up of 2008; where BHP Billiton moved back, Chinalco is baring its fangs. The Chinese aluminium major is planning to double its stake in Rio Tinto to as much as 18% by investing $19.5 billion. Opposition to the deal has even led to Chairman Jim Leng resigning barely two months after his appointment! It is being speculated now that BHP Billiton could make a counter bid. Indian mining giant Sterlite has also completed its acquisition of Asarco at a lower price. Although deal making in mining dropped by 47% to $127 billion due to the severe hit on commodity prices, 2009 would see a boost due to an “eventual inevitable string of players who’ll go into bankruptcy,” as per a report by Ernst & Young.
The other sector where the spurt of M&As would have surprised many is pharma. Three big ticket deals and we are not even past the first quarter of the year yet! Pfizer has gobbled up Wyeth for a massive $68 billion, and then Merck has targeted Schering-Plough in a $41.1 billion cash and stock deal. Roche, meanwhile, plans to take full control of Genentech by shelling out a whopping $46.8 billion for 44% stake (it already owned 55.8%), for the latter has a terrific innovation culture that Roche wishes to own. Last year, we witnessed the acquisition of Ranbaxy’s promoters’ stake by Japanese firm Daichi Sankyo for Rs.150 billion. Did someone say that the downturn makes companies itchy when it comes to shelling out cash? It does, but for Big Pharma, it has been a do or die battle for quite sometime. As patent expiries loom, these companies are obviously looking for targets to secure their future.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2009
Mining is another sector that seems ripe for consolidation. Coming back to the largest pre-marital break up of 2008; where BHP Billiton moved back, Chinalco is baring its fangs. The Chinese aluminium major is planning to double its stake in Rio Tinto to as much as 18% by investing $19.5 billion. Opposition to the deal has even led to Chairman Jim Leng resigning barely two months after his appointment! It is being speculated now that BHP Billiton could make a counter bid. Indian mining giant Sterlite has also completed its acquisition of Asarco at a lower price. Although deal making in mining dropped by 47% to $127 billion due to the severe hit on commodity prices, 2009 would see a boost due to an “eventual inevitable string of players who’ll go into bankruptcy,” as per a report by Ernst & Young.
The other sector where the spurt of M&As would have surprised many is pharma. Three big ticket deals and we are not even past the first quarter of the year yet! Pfizer has gobbled up Wyeth for a massive $68 billion, and then Merck has targeted Schering-Plough in a $41.1 billion cash and stock deal. Roche, meanwhile, plans to take full control of Genentech by shelling out a whopping $46.8 billion for 44% stake (it already owned 55.8%), for the latter has a terrific innovation culture that Roche wishes to own. Last year, we witnessed the acquisition of Ranbaxy’s promoters’ stake by Japanese firm Daichi Sankyo for Rs.150 billion. Did someone say that the downturn makes companies itchy when it comes to shelling out cash? It does, but for Big Pharma, it has been a do or die battle for quite sometime. As patent expiries loom, these companies are obviously looking for targets to secure their future.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2009
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