Taking the pulse of 4 takeover candidates

Mergers and acquisitions activity is heating up among big pharma and biotechs.

By Stock Traders Daily May 3, 2012 2:25PM

Image: Dentist working on a computer © Andersen Ross/Brand X Pictures/Getty ImagesAs the economic landscape continues to slowly improve in the U.S., talks of increased mergers and acquisitions activity in the health-care sector have heated up. Big pharma remains on the lookout for ways to strengthen pipelines and M&A has always been a popular option for accomplishing this. 


Here are four companies that could be taken over in 2012:

 

Forced hand

After Carl Icahn turned up the heat on Amylin Pharmaceuticals (AMLN) it became apparent that this company would ultimately have to sell itself. Amylin spurned an unsolicited offer from Bristol-Myers Squibb (BMY) in late March, but its days as a stand-alone biopharma are likely numbered. 

 

Though Icahn recently dropped his lawsuit, it probably forced the company realize that a sale was inevitable. According to several media reports, Amylin has called upon Credit Suisse and Goldman Sachs to help it seek out additional offers. The company's stock price has seen an impressive run-up as takeover talks have heated up. Shares of Amylin have soared 122.7% since the beginning of the year.

 

Another drugmaker that may soon find itself to be the subject of an increasing number of takeover rumors is Forest Laboratories (FRX). The company has been mentioned as a potential target for AstraZeneca (AZN), which is beginning its search for a new CEO. Forest has five drug candidates in phase 3 trials and two that are awaiting decision on new drug applications.

 

Honorable mentions

With Johnson & Johnson (JNJ) looking to build out its medical device unit, St. Jude Medical (STJ) has become an attractive acquisition candidate. St. Jude is a significant player in the implantable cardioverter defibrillator (ICD) and pacemaker arenas.

 

In the first quarter, St. Jude posted ICD sales of $450 million or a 3% decrease when compared with the prior year quarter. The company reported pacemaker sales of $285 million, which represented a 4% decline on a year-over-year basis. Shares of St. Jude are up 13.2% year-to-date.

 

One other company that has been mentioned as a potential takeover target of JNJ is Edwards Lifesciences (EW). Last year, the company won FDA approval for a heart valve device designed for patients who are unable to undergo a chest-opening procedure. Shares of EW have surged 22% so far this year.


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