The government would not approve a merger that results in one company having a 55% market share on I.V. pumps. If the merger was approved, it would be with the condition that Cardinal would have to sell off one of the pump lines. The rest of your post seems to make good sense.
Don't be so sure it is not possible! In the US hospital IV infusion pump market, CAH is at a disadvantage vs. HSP, BAX and B Braun because they don't manufacture IV solutions. The other 3 players all "bundle" pricing based on compliance of using both their IV pumps, IV solutions, IV admixture products, pharmacy IV TPN solutions, pharmacy IV antibiotics and needleless systems and even PCA.
All hospitals need all of those products and the fact is that if a hospital buys/leases CAH pumps, they pay up on all the other items which can be a substantial increase for "non-compliance" aka not buying into the bundle.
So, a HSP takeover would give CAH all of those missing pieces. The added market share on pumps wouldn't hurt. As far as SEC not granting approval for anti trust. Bear in mind that there are 4 players in the IV pump space. If you add CAH and HSP together it is still under a 55% market share for US IV Pumps. I don't see antitrust issues as a concern. The buyout price would be the main issue. Considering that BAX is a sinking ship now with Colleague recalls and all of their customers are at risk as contracts expire, I think this buyout makes sense if the price is right.
<<What I hear is Cardinal HealthCare is considering to buy?>>
There is no way. Cardinal owns Alaris which competes with Hospira's fine infusion devices and software. There would be anti-trust considerations as well as the fact that you don't need multiple product lines doing the same thing. If Cardinal considered buying out Hospira, they'd have to sell off either Alaris or the Hospira pump lines. It might make sense for one of Cardinal's competitors to buy Hospira in an attempt to compete with Cardinal. Cardinal does a good job of bundling distribution with their other products. This results in hospitals receiving over all cost reductions. I think their bundling strategy is hurting competitors. If Amerisource or McKesson bought Hospira, they could really have leverage in hospitals. Offer them discounts on generic drugs, I.V. solutions, pumps etc. Do either of these companies have the $8 or $9 billion required to buy Hospira? They probably do.
The Cardinal rumor probably started because there was a story that Cardinal offered to buy HPD from Abbott after it became known that Miles was spinning off HPD. Don't know if it's true.
There is a legitimate debate whether Hospira should pay a dividend or buy back stock. They obviously opted for the buy back.
Do not worry about Hospira's stock price. In the short term, it will gyrate. In the long run, it's going much higher. The sooner the international business takes off, the sooner the stock will begin moving up a lot. It would not surprise me to see it above $50 before 2006 has concluded. Possibly to $55 if they are beating earnings expectations handily, which they probably are. First quarter was excellent, although they cited the quarter to quarter fluctuations that occur in pump sales and first quarter had strong pump sales.
There are people on this board pulling against Hospira. They will be disappointed. It's not a perfect company, but they have their business under control, with considerable growth ahead from generics, pumps and international sales.
That would be interesting especially if Cardinal takes over based on having two or near two warning letters in the past two years. One FDA audit I believe initiated a Cardinal plant shutdown.
If it does happen I will be selling all my converted HSP stock as soon as the deal is announce and paying off my lake home and smoking a big fat Cuban cigar that I picked up a month ago while in Cuba.
Heard that the money was already in the bank!! Wonder what the offering price would be?? Question is whether current HSP margins meets Cardinal's requirements? Are they in it for the whole package or generic drugs??
There is a big difference in business model for Hospira. They are margin driven generic drug, where the main cost is the delivery system (vials, ampules, etc..). To retain the older and wiser employees one has to think long term. This is where Hospira is missing the boat...Why not go to a start-up/mid-size company that gives both the short-term (options) and long term (an attractive retirement plan)?? And options are only good if there is a significant increase in price. Does one think that HSP will grow in the next 5 years at the same rate it has increased in the last 2 years?
And while we are on the subject....Do you think that dividends will make the stock more attractive, and thoughts on when/if HSP management will get this message?
The company is going to offer stock options to make up for the retirement that you won't see. The conversion factor will compute to about $1.00 for every $15,000.00 you would of received as Abbott retirement. This will allow Hospira to operate it's generic business and pay the exec's the salary and bonuses they need. Ha Ha shmuck!
If your planning on retiring in next 15-20 yrs. you had better be putting in the max to you 401K. Not to many of people that retired even under Abbott received $15,000 per yr. The important benefit was the post retiree's health insurance. If your not management receiving all the perks, then you had better pay yourself (401K), that is the only way you will have adequate retirement funds.