Health-Care M&A Premiums Soaring

Strategic buyers are paying hefty prices for growth plays in health-related fields.
Katie Kuehner-HebertMarch 31, 2015
Health-Care M&A Premiums Soaring

The health-care industry is delivering large deal premiums as the pace of consolidation picks up and buyers look for targets that meet strategic and growth objectives.

A MarketWatch  story on Tuesday said there have been $89 billion in health-care mergers and acquisitions so far this year, compared with $56 billion during the first quarter of 2014, according to S&P Capital IQ. On Monday alone, a spate of health-care companies announced deals, including three with “hefty premiums, helping to send major stock indices soaring.”

In the first deal, Horizon Pharma agreed to buy Hyperion Therapeutics for $46 a share in cash, or about $956 million, MarketWatch said. The premium was 8% from Friday’s close, while Hyperion’s 30-day takeout premium was 71% and the 90-day premium was 120%, according to FactSet.

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Teva Pharmaceutical Industries said it would buy Auspex Pharmaceuticals for $101 a share in cash, or roughly $3.2 billion. The takeout price represented a premium of 41% over Friday’s close, a 50% premium to the Feb. 27 close and a 100% premium to the Dec. 30, 2014, close.

The third major health-care deal on Monday was UnitedHealth Group’s agreement to purchase Catamaran, which provides prescription-benefits services, for $61.50 a share, or roughly $12.8 billion, MarketWatch said. The cash deal represented a premium of 36% over Friday’s close, while the 30-day takeout premium was only 20% and the 90-day premium was even lower, at 15%.

Also on Monday, Fujifilm made a tender offer of $16.50 a share for Cellular Dynamics, representing a 108% premium over the target company’s closing price of $7.94 on Friday.

According to a Harris Williams & Co. video, “Entering [2015], robust financing markets, highly active strategic buyers, and significant amounts of private equity capital continue to lead to strong valuations. The number of new deals coming to market and pitch opportunities have increased since the start of the year.”

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