MERGERS AND ACQUISITONS
M&A market for pharmas 'not dead'
The head of battered Canadian pharmaceuticals company Concordia Healthcare Corp. says wheeling and dealing in the global pharma sector isn't over – not by a long shot.
"The M&A market is not dead at all. It's just a question of what it looks like," Mark Thompson, Concordia's chief executive officer, said in an interview.
Until recently, shares in Concordia, like the much bigger Valeant Pharmaceuticals International Inc., had skyrocketed after it made a series of "accretive acquisitions" – buying assets that add to profit and sales by using near-historically cheap debt to finance the whole shebang.
But over the past six weeks, investors have fled the specialty pharma sector en masse after a series of scares, including threats of a U.S. crackdown on drug price increases and doubts being raised about the quality of Valeant's accounting. Concordia has repeatedly gotten caught in the downdraft, with its stock cratering more than 60 per cent since hitting an all-time high of $84.17 (U.S.) in early September. Mr. Thompson argues that the currently depressed valuations in pharma companies will attract buyers.
"There is a high probability that there will be further consolidation," he said. Story
When short sellers attack, it's tough to know who's trading
Did DH Corp. plummet 17 per cent Monday because the skeptical short seller behind a scathing report lined up hedge funds to suddenly back its trade, or did the stock tank because rational investors saw the short's report and quickly agreed?
Or, was it that a few investors saw the report and started selling, prompting algorithmic trading programs that prey on momentum to take over?
The frustrating answer: It's almost impossible to tell.
What transpired with DH's shares is something akin to a trading black box, and it's a scenario that is becoming much more common.
The recent criticism of Valeant Pharmaceuticals, voiced by a short seller, is the most obvious parallel – but it is just one of many. Story
Walgreens close to buying Rite Aid
According to The Wall Street Journal, Walgreens Boots Alliance Inc. is in "advanced talks" to buy Rite Aid Corp. in a deal that would see a deal between the second- and third-largest U.S. drugstore chains by revenue.
The paper says a deal is expected to be announced Wednesday. Story
FINANCINGS
National Bank Financial leads $25-million (U.S.) bought deal for Sandstorm Gold
Gold royalty financing company Sandstorm Gold Ltd. announced it has raised $25-million (U.S.) in an equity bought deal.
The deal was done at $2.85 a unit, a modest discount compared to the $3 closing price Monday on the New York Stock Exchange. Each unit gives a holder one share in Sandstorm and a half a warrant to buy a share at $4.
The financing was co-led by National Bank Financial Inc. and BMO Nesbitt Burns Inc.
Sandstorm plans to use the proceeds in part to fund its $152-million acquisition of a number of production streams from Yamana Gold Inc., which it also announced on Tuesday. Press release
INSIGHT
Canadians should be wary of the 'alternative asset' sales pitch
Retail investors should tread carefully before investing in alternative investments such as private equity, infrastructure and real estate, argues Tim Kiladze in his weekly column for The Globe and Mail.
AGF Investments and Mackenzie Financial, traditionally known for selling plain-vanilla mutual funds, have started to offer alternative investments.
Part of the pitch is the old "diversification" argument but perhaps what might not get stressed is the high fees many of these products carry and the risk they may add to the portfolio. Story
If you have any story suggestions for Daily Deals, e-mail us at deals@globeandmail.com or nmcgee@globeandmail.com.
Niall McGee