Andy, The WSJ Interactive suggests that more of LGND's partners may be "in play":
The Wall Street Journal Interactive Edition -- January 24, 1998
Talk of Pharmaceuticals Merger
May Pave Way for Further Deals
An INTERACTIVE JOURNAL News Roundup
Global consolidation in the pharmaceutical industry moved to the forefront
this week as SmithKline Beecham PLC and American Home Products
Corp. disclosed they have held merger talks.
If consummated, the deal would create the world's largest drug company
and mark the biggest corporate combination in history.
Discussions between the two firms began in early November, but cooled a
few weeks later because of disagreements over price and other issues,
according to people familiar with the matter. American Home, based in
Madison, N.J, is valued at about $61 billion, slightly less than
London-based SmithKline's market capitalization of about $65 billion.
The talks also suggest the drug industry could
be in for another dose of merger mania. After
anxiety about health-care cost containment
and the headache of marketing to the
managed-care industry inspired a rash of
blockbuster mergers in the mid-1990s, the
urge to merge in the drug industry has waned
as companies found profit relief in a two-year
stretch of hearty sales. The last megadeal, the
marriage of Sandoz Pharmaceuticals and
Ciba-Geigy, gave birth to Novartis AG in late
1995.
Now the top candidates for consolidation
include Schering-Plough, WarnerLambert and
Eli Lilly, the solid middle tier of the industry
whose companies face an uphill struggle to
reach the top ranks and compete with such
industry giants as Merck, Glaxo Wellcome
and Novartis.
Looming "patent expirations, and the pace and cost of technology
development all require more financial muscle," said Steven Gerber,
drug-industry analyst at CIBC Oppenheimer. "It's quite clear to us that a
considerable amount of additional consolidation has to occur."
Mariola Haggar of Deutsche Morgan Grenfell said "If this merger
materializes, it clearly puts pressure on other companies to review their
critical mass and competitive position." Size, she argues, is crucial for
companies to compete both for market share and for investment dollars in
the global marketplace.
To be sure, betting on a new round of deals carries plenty of risk for
investors, not least of which is the uncertain prospect that the American
Home-SmithKline transaction will actually be completed. Few analysts
were recommending drug-company shares as takeover plays. One analyst,
David Lippman at Prudential Securities, said he doesn't believe any new
round of mergers is imminent.
Other Deals
In other transactions, Hicks, Muse, Tate & Furst Inc. and Kohlberg
Kravis Roberts & Co., are combining the movie-theater chains they are
acquiring and plan to purchase Regal Cinemas Cos. in a transaction that
will create the biggest movie-theater chain in the U.S. The surprise move
will form a company with 5,347 screens in 727 locations -- an estimated
17% of the screens in the country.
St. Paul Cos., a Midwestern property and casualty insurer, said that it
agreed to acquire USF&G Corp., a Baltimore insurer, in a stock swap
valued at $2.8 billion, or $22 a share.
Arthur Andersen, the accounting unit of Andersen Worldwide, will seek a
roughly $10 billion payment, technology royalties and return of the
Andersen name as part of the price of granting a divorce to Andersen
Consulting, an Arthur Andersen partner said.
And Dick Strong, founder of the Strong Funds group, has talked to
investment bankers and confirms he is exploring options for the
mutual-funds firm.
Earnings
Chrysler Corp. said Friday its fourth-quarter net income rose 5.6%,
beating Wall Street estimates, although some of the company's profits
came from one-time gains. And Xerox Corp. announced a
better-than-expected 23% jump in fourth-quarter earnings and raised its
quarterly dividend.
For a complete look at recent corporate earnings stories, the earnings
calander and earnings surprises, see our Earnings Focus page.
Talking Points
Boeing has dropped plans to further ramp up its commercial-jetliner
production in late 1998. It expects to sustain record assembly rates
over the next few years, CEO Phil Condit says.
Wall Street firms will soon face new accusations, backed by
statistics, that they haven't done enough to create a more diverse
work force. The U.S. Commission on Civil Rights is preparing a
major study on Wall Street's record in hiring African-Americans
and other racial minorities.
Raytheon said it will eliminate 9,700 jobs, about 8% of its
workforce, and close at least 20 plants, in an effort to consolidate
recent acquisitions.
Edward J. DeBartolo Jr., before winning a Louisiana casino license,
obtained confidential records detailing competitors' finances,
according to people familiar with the matter.
Mattel beat out Hasbro to sign an exclusive NBA licensing deal,
according to company and NBA officials.
Three major ad agencies, Foote, Cone & Belding, Grey Advertising
and Rubin Postaer & Associates, have settled FTC charges of
deceptive advertising by agreeing to stop putting upfront
auto-leasing costs in a blur of small print in their television ads.
Charles Schwab backed off from its plan to add research reports
from some full-service securities firms to its on-line trading site after
the firms, including Merrill Lynch, said they objected. |
