Onyx Pharmaceuticals and Amgen Are Almost There
It looks there’s finally closure in the Amgen (Ticker: AMGN) / Onyx Pharmaceuticals (Ticker: ONXX) saga. The New York Times (click: here) broke the news on Saturday that Amgen was close to acquiring Onyx Pharmaceuticals for ~ $125.
I of course like everyone else was looking for something around ~ $130, but I’ll take $125 at this point. My average price is $115.64 so I have a potential 8% gain. I also sold some September $115 puts so I’ll collect some nice premium from those. All in all, I’m pleased with how this turned out, but I didn’t have the conviction to go in big. Still a ~ 10% position will have a positive impact on my portfolio.
So hopefully tomorrow morning, we'll see the official press release.
posted by Money Turtle @ 6:13 AM
8 comments
8 Comments:
Interesting price action today in ctb - someone made a comment that rbi will review Apollo deal. Hard to stop it as Apollo complies with RBI regulations. India is a funny place though as the rules can be bent as one feels fit; however the new RBI governor seems to have some sense. I picked up some ctb today.
I was keeping my eye on CTB and trying to understand the situation. Just wondering how long this potential review will take.
MT / Bhat,
FYI CTB
In a surprising development, yesterday brought word that Indian banking regulators would take a look at Apollo Tyres’ acquisition of Cooper Tire & Rubber (CTB) to see if the deal runs afoul of new capital outflow requirements. Recall, on 14 August the Indian Reserve Bank, in an attempt to support the falling rupee, announced new limits on overseas direct investments. And for a moment, this caused a worry that the CTB deal could get swept up into a troublesome review. For its part, Apollo moved to head off this worry by signaling last week that it had blue skies ahead as its deal was inked before the outflow requirements were announced. This no longer appears to be the case as a conflicting story came out yesterday in the Indian press. That story claimed all proposals for overseas direct investment would be scrutinized, including the CTB investment. This deal was already trading wide and after yesterday’s 3% fall CTB is now changing hands exactly USD 3.50 lower than its USD 35 takeout price. This isn’t a post-announcement low, but it's close.
http://businesstoday.intoday.in/story/rbi-to-scrutinise-pending-overseas-deals/1/198098.html
Regards,
inforesource7
Here is the intriguing part - the deal is supposed to raise $450 million from Apollo and the rest from Cooper. The breakup fee is $180 million. So the diff is 270 million which is a no-op from foreign currency reserve standpoint. Also, Indian shareholders gain in this deal.
Regarding timeline, I don't think there is a timeline for the indian government.
http://www.reuters.com/article/2013/08/27/cooper-acquisition-idUSL2N0GS0VP20130827?feedType=RSS&feedName=bondsNews&rpc=43
MT,
How about something unique to mix things up a little bit in the M&A world?. Lets take a swim with the big boys. Verizon (VZ) in talks to buy back 45% stock stake of VZ from VOD. Rumors of this deal first surfaced earlier in the year and peaked around April. Check out the stock price highs for both back then. It is a little hard to figure out what price each might reach starting Thursday morning but they will both will benefit in there own way. Considering VZ will make an offer for cash and stock and all of the bankers involved will make a very nice commission it would be in the best interest of all parties involved for VZ stock price to rise. VZ has a $133b market cap (ranked #22 on S&P 500) so it will take alot of volume to move this baby up and everyone will want to go along for a ride. It will buoy the U.S. markets. A little history, the U.S. wireless market is the most profitable in the world. They make on average $69 per month per subscriber where in Europe carriers make on average $38. I dont know how to value what VOD might be worth so I like VZ better here. I cant think of any reason why VZ would sell off before any official announcement is made. The market would like to see this deal go through.
This transaction will be huge and one of the largest in U.S. history.
http://www.bloomberg.com/news/2013-08-29/verizon-said-near-130-billion-deal-for-vodafone-wireless-stake.html
Regards,
inforesource7
MT,
FYI, VZ and VOD. Correction to my first post VZ would not offer cash and stock to buy back its stock. It must be an all cash offer where VZ has to finance $60b of the toal amount.
VOD opened up +9% in Europe Thursday morning. No one really knows how to value VOD yet. VOD benefited from holding VZ stock because of large dividend payments.
Now onto some math:
VZ outstanding share balance = 2.85b shares. If my math is correct 5.18b total shares * 55% = 2.85b shares. 5.18b - 2.85b = 2.33b shares held by VOD (45% stake).
This deal is the equivalent of a very large leveraged share buyback.
So $130b - $5b VOD Italia (23% stake) = $125b / 2.33b shares = $53.65. This is the approx. cost per share VZ is offering to pay to buy back its 45% of share from VOD. We will have to see how mr. market re-prices VZ share price.
Regards,
inforesource7
MT,
FYI VZ and VOD. Sorry I need to correct a few errors from my two previous posts. Verizon Wireless is a joint venture between VZ and VOD and therefore not a publically traded company. So Verizon's $130b offer to VOD would include cash and VZ stock after all. VZ is buying out the joint venture partnership not actual VZ shares, my bad, my real bad. The following dated Forbes and Barrons articles will provide some good background on the numbers. I wonder if VZ would consider letting Verizon Wireless go public. That would be the cherry on the top of the cake in the distant future.
http://online.barrons.com/article/SB50001424052748704235404578400511643672902.html#articleTabs_article%3D1
http://www.forbes.com/sites/afontevecchia/2013/04/29/verizon-deal-with-vodafone-could-be-worth-more-than-130b-would-create-largest-u-s-carrier/
Regards,
inforesource7
Thanks for the info on Vodafone / Verizon. I decided to play this with some Vodafone.
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