DISCLAIMER This information represents neither an offer to buy or sell any security nor, because it does not take into account the differing needs of individual clients, investment advice. Those seeking investment advice specific to their financial profiles and goals should contact their Oscar Gruss & Son Incorporated sales representative. Oscar Gruss & Son Incorporated believes this information to be reliable, but no representation is made as to accuracy or completeness. This information does not analyze every material fact concerning a company, industry, or security. Oscar Gruss & Son Incorporated assumes that this information will be read in conjunction with other publicly available data. Matters discussed here are subject to change without notice. There can be no assurance that reliance on the information contained here will produce profitable results. A security denominated in a foreign currency is subject to fluctuations in currency exchange rates, which may have an adverse effect on the value of the security upon the conversion into local currency of dividends, interest, or sales proceeds. The value of securities and depositary receipts of foreign issuers that are denominated in United States dollars are also influenced by fluctuations in currency exchange rates. © 2016 Oscar Gruss & Son Incorporated. All rights reserved.MDVN ($10.2B MC @ $62) - Potential bidders reported today are CELG ($80B MC, $5.7B cash & $14.3B debt @ 3/31/16), GILD ($115B MC, $11.3B cash & $12.3B debt @ 3/31/16), SNY ($103B MC, $10.0B cash & $18.0B debt @ 12/31/15), AZN ($75B MC, $4.1B cash & $16.3B debt @ 3/31/16) and NVS ($206B MC, $5.1B cash & $28.1B debt @ 3/31/16). CELG & GILD are biotech companies, as is MDVN. SNY, AZN and NVS are all large pharmas.
MDVN currently has $300M net cash for a $9.7B EV (@ $62/share), which is an 8.4x multiple of 2017E revenues of $1.17B (up 25% YoY) and a 29x P/E multiple of 2017E $2.14 EPS (up from an estimated $1.33 EPS in 2016E and $1.01 in 2015). The potential buyers trade at 2017E P/E multiples of 14x-15x (except GILD which trades at 7x). It appears that MDVN's bankers are setting up a bidding contest amongst well-heeled buyers for a company with prospects for high near-term growth and a focus on prostate cancer (the second most common cancer) which should be attractive to the large pharma companies with existing worldwide distribution capabilities.
MDVN traded in the $68/share range in March 2015 which implies multiples of 9.3x EV/Revs and 32x P/E. Multiples of 10x EV/Revs and 35x P/E imply takeover values of $73 and $75, respectively. MDVN traded at prior 20 day average closing price of $42.25; the SNY $52.50/share offer was a ~25% price premium. A 50%-60% price premium implies a $63.50-$67.50 takeover price; a 70% price premium is $72.00/share.
The MDVN annual meeting is scheduled for June 22; NVS announced today eight director nominees to the MDVN Board. The net is that the sale process should be over by the annual meeting and bidding may be fast and furious (as reflected in the current premium that MDVN is trading to the NVS proposal price). A 70%-80% probability of a deal being announced implies a $67-$70/share takeover price based on the prior 20 day price as a downside.
DISCLAIMER
This information represents neither an offer to buy or sell any security nor, because it does not take into account the differing needs of individual clients, investment advice. Those seeking investment advice specific to their financial profiles and goals should contact their Oscar Gruss & Son Incorporated sales representative. Oscar Gruss & Son Incorporated believes this information to be reliable, but no representation is made as to accuracy or completeness. This information does not analyze every material fact concerning a company, industry, or security. Oscar Gruss & Son Incorporated assumes that this information will be read in conjunction with other publicly available data. Matters discussed here are subject to change without notice. There can be no assurance that reliance on the information contained here will produce profitable results. A security denominated in a foreign currency is subject to fluctuations in currency exchange rates, which may have an adverse effect on the value of the security upon the conversion into local currency of dividends, interest, or sales proceeds. The value of securities and depositary receipts of foreign issuers that are denominated in United States dollars are also influenced by fluctuations in currency exchange rates.
© 2016 Oscar Gruss & Son Incorporated. All rights reserved.