The source was deal reporter. Hopefully Bloomberg which reported on the exclusivity back in August will follow up with an article with more details soon. Yes, with a tag team approach one would think the offer would be higher and each suitor would get the parts of ICU that they want.
Now we know what the delay in the sales process was. News out this afternoon. "Suitor GTRC said to be working with BAX for joint bid."
FYI, GTRC is the PE Firm and BAX is Baxter. Expect Reuters and Bloomberg to follow up with an article soon with more details.
My bad on the stated ROCM EBITDA takeout multiple. I actually copied it from the yahoo finance / company / key statistics page last week which may not have updated post deal news. For some reason today the EV / EBITDA value has refreshed to display 23.60x which is accurate. FYI today ICUI EV / EBITDA multiple is 9.91x so lets see what multiple ICUI can negotiate with the PE firm.
Scheinrocks, all good points to bring out. The process is painful but hopefully it will be all over soon. As an FYI, ROCM EBITDA takeout multiple was 14.58x and not 20x. I understanding using comps but some other points to consider.
ICUI marketcap is 4 times ROCM
ICUI EBITDA is 8.43 times ROCM
ICUI is in exclusive talks with a PE Firm; ROCM is being acquired by a strategic buyer
Looks like both companies founders (ICUI founder) and ROCM (2 co-founders) are cashing out
Smaller companies generally receive a higher control premium versus larger firms; ROCM is being taken out for a 37% control premium.
My best guess is, ICUI gets taken out in the $75 to $80 range.
Cybercash28 should have thought about shorting earlier in the process not at the end. Bad timing now. I thought she / he was better than that. Might be better at RSI stocks versus M&A targets.
I think I may know why CTB stock price has been declining. Do a search on money.cnn for article titled "India edges toward crisis as rupee plunges"
But of course a seeking alpha article two days before options expiration. The writer has only written one article and does not have very many followers. Any potential stock pop on Thursday might be limited. The writter obviously does not know too much about M&A. GTCR, a PE equity firm is in exclusive talks. This means ICUI has committed to GTCR unless they do not come to an agreement. Although in the writers eyes BX might make a good fit and might be stupid enough to pay a very high premium, BX has been absent from the process. The writer is obviously getting anxious just like the rest of us.
I have never been involved in a deal to the very end (closing) with a CVR as part of the deal. The cash component here is $10.75 Hypothetically if tomorrow was the deal closing day, how would the OCC process work if one held a AUG call for the $10 strike? Would I be credited with $10.75 in cash and then granted a future dated CVR in the form of an option or some other instrument?
For all of you traders expecting a $130 all cash offer beware AMGN may include a CVR to sweeten the deal for ONXX senior mgmt but will shareholders be happy with a CVR?
Many pharma acquisitions include CVR's in the total deal price and disappoint shareholders who thought they would actually get more than what was rumored.
copied from an older NYT article: " It’s a neat way to close a gap in expectations. But investors mostly don’t like contingent rights. Their specialized nature and limited shelf life mean they tend to be illiquid. And the inherent uncertainty tends to mean they trade at a discount, even to an objective estimate of their fair value."
Do a google search for new york times and the article titled, "Contingent Rights Shouldn’t Catch On"
I agree with you on ICUI being a good company and the sales process they have gone through. Yes, GTCR was selected and now are negotiating the final details including price. PE guys are known as financial sponsors (numbers guys) and when they take a company private they borrow money (LBO) to do so which adds debt to the business. The cash flow from the business needs to be able to pay for the debt service. If they overpay, the banks will not loan to them without requiring a larger down payment. The ultimate goal of a PE firm is to make improvements to the business and it must be self sustaining. After about 3 to 5 years ICUI could be offered as an IPO or sold to another PE firm or a competitor and this is when the PE firms actually make their profit on the down payment they used for the original loans.
The stock price spike you saw today does not dictate how much a PE firm is willing to pay. Take a look at the long wick above the white body of the candlestick at about 3:50PM.
The closest industry comparable I can think of is LIFE technologies. If you recall LIFE was acquired by TMO on 4-15-13 for $76 cash or about $13.6b, at a 38% control premium. TMO is a strategic competitor not a PE firm. LIFE is also much larger in size than ICUI.
LIFE was taken out for 12.58x EBITDA and 3.52x sales.
Take a look at yahoo / finance / key stats and compare LIFE with ICUI numbers.
A 38% control premium for ICUI would be approx. $84. Does ICUI warrant the same premium? I dont see a PE firm paying that much. I will stick with my upper range number to be conservative.
Good luck to us both and lets compare notes if a deal gets done.
I follow M&A and understand the process. What you may have read were analysts potential takeout projections. This afternoons bloomberg article mentions no price ranges. My best guess is between $75 to $78 maximum. PE firms have a long history of never paying high control premiums. Strategic competitors generally pay more to keep the PE firms at bay and win the bid. The exclusive talks will be a one on one with ICUI, so no outside influences for any bidding up the price, just old fashion sales and marketing by PE firm for BOD to accept their offer with some mgt buyout sweetners. So in essence PE isolated any strategic competitors in the final process.
What do you think the final control premium (percentage gain since news leaked) should be?
BREAKING:$ICUI is in exclusive talks to sell itself to private equity firm GTCR, sources told Bloomberg.
GTCR will not pay as much as a strategic buyer would pay. If ICUI is locked into talks there is no competitors to keep the bidding going. You may have to lower your expectations on a potential takeout price. My best guess is $75.00
The deal, which combines Nielsen's core TV ratings and consumer buying habits business with Arbitron's focus on the consumption of radio and out-of-home media, has been presented by the companies as a complementary combination. Both companies have in recent years attempted inroads into each other's markets without success, which is likely one focus of the FTC inquiry.
There has also been speculation that the FTC could be concerned with competition in technology for measuring media consumption through Arbitron's portable people meter that requires less action by a consumer to collect and report data for aggregating. Arbitron's PPM technology takes the industry standard a step forward by automatically collecting information regarding exposure to media through codes imbedded in programming audio and detected by a device carried by a participating subject. Nielsen has similar technology under development, as do other competitors, such as Civolution BV, a spinoff of Royal Philips Electronics NV.
Nielsen's official position on the FTC review has been that the company is working with third parties, including regulators, to ensure all customary closing conditions are satisfied as soon as possible.
The merger agreement requires Nielsen to accept divestitures or other actions, such as licensing, to resolve antitrust concerns as long as the concession does not account for more than $131 million in 2012 Ebitda.
MT / eI2016,
I came across this article and wonder what you think?
Nielsen Sets Clock Ticking on FTC Review
Nielsen Holdings NV indicated on Tuesday, July 30, that it certified compliance with the second request regarding its $1.3 billion merger with Arbitron Inc.
The Federal Trade Commission has been reviewing the acquisition by Nielsen of Arbitron since issuing a second request March 8 after the companies refiled their notification under the Hart-Scott-Rodino process.
Nielsen CEO David Calhoun said on the company's earnings call Tuesday that the FTC "has a window that they are committed to by law to get back to [Nielsen] with respect to the second request, that we now have submitted. The process has been very workmanlike and nothing has surfaced over the course of that process [that] was either surprising or different than anything we thought about going into it." The CEO added, "It's always longer than anybody would like but I think the dialogue has been healthy for everybody."
Nielsen expects the FTC to make a decision regarding the antitrust review by the end of August. The company declined to peg a specific date.
While Nielsen has apparently certified compliance with the second request and must have some indication that the FTC accepts that certification, there does not seem to be any timing agreement regarding the review. Such an agreement would typically mean the merging companies agreed to not close by a certain date to allow the agency time to complete its analysis, as opposed to waiting on a deadline for the agency to act. Certifying compliance without a timing agreement can imply a degree of contention in the review process. It does not sound like Nielsen has made any proposals to address potential competition issues that the FTC may have.
For what it is worth 8 million shares will have to be covered at some point which may keep the stock price elevated above the cash offer. Shorts usually get stopped out on the higher end of a deal but this time they have to decide when to cover on the lower end without forcing the price higher. Keep an eye on the after hours and pre-market trading volumes to see what they do. For now Longs can control the ASK price.
Does the date of the index change usually coincide with a deal closing date or can an index change happen prior to a deal closing by days, weeks or months? The last I read GDI deal closing was on track for end of Q3.
In addition to the overall need for effective therapies with high cure rates, therapies that prevent CDAD recurrences, and for those that have proven efficacy in recurrent infections, effective IV CDAD therapies also have a place in the CDAD market, specifically among patients that cannot tolerate oral therapies” said Associate Therapeutic Class Director of Infectious Diseases Brenda Perez-Cheeks, Ph.D. “This is an area where tigecycline, which has potent activity against C. difficile and is emerging as a salvage therapy for CDAD, could gain patient share and differentiate itself from the competition”
With respect to emerging CDAD therapies, physicians generally have low awareness of agents in development for treatment of CDAD; approximately 10 percent of physicians are aware of Merck’s 3415A and Cubist’s CB-315, while only 4 percent are aware of Actelion’s ACT-179811 (cadazolid).
Any thoughts on this older news / survey would be appreciated.
According to Surveyed Physicians, Oral Vancomycin and Optimer/Cubist/Astellas’ Dificid are the Top Performing Drugs in the Treatment of CDAD
BioTrends Research Group and Arlington Medical Resources Release TreatmentTrends®:Clostridium difficile Infections (U.S.) Report
December 17, 2012 - Exton, Penn. – BioTrends Research Group and AMR in their TreatmentTrends®: Clostridium difficile Infections (U.S.) report find that metronidazole and oral vancomycin continue to be the workhorse drugs for the treatment of Clostridium difficile-associated diarrhea (CDAD), but metronidazole is likely to lose market share, owing to metronidazole treatment failures. Furthermore, physicians perceive both oral vancomycin and Optimer/Cubist/Astellas’ Dificid (fidaxomicin) as the leading performers in areas that are important to prescribing practices for CDAD, including lower risk for relapse, efficacy in severe CDAD, and efficacy in recurrent infections. Moreover, about half of surveyed physicians indicate that fidaxomicin, Salix’s Xifaxan (rifaximin), and fecal transplants stand to gain from increases in physician use in the next 12 months.
Surveyed physicians also note that a notable segment of the CDAD patient population is unable to take oral capsules, and approximately 40 percent of CDAD patients are administered therapies via alternative routes, including IV, enema, and nasogastric tube. Indeed almost all physicians report using IV metronidazole in the past 12 months for CDAD, but, nearly one-third have also used Pfizer’s IV Tygacil (tigecycline) for this indication.
see next post for part two
Does anyone ever listen to or read the transcripts for Astellas earnings? Being a foreign company it has been hard to locate.This could provide another clue on Dificid sales if they report prior to OPTR.
If any of you follow Pharma closely the following may make sense to you and maybe you can provide your thoughts.
I have read that OPTR mgmt presentations took longer than expected due to suitors asking for more data on relapse rates that have supported the pricing of Dificid. Is this standard practice during due diligence or does it sound like the suitors have a concern?
I have also read that Dificid is seen as a third-line therapy in CDAD which limits sales for the drug.