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Breakingviews: Targeting Amgen

Wednesday, October 22, 2014 - 03:21

Rob Cyran and Jeffrey Goldfarb discuss activist investor Dan Loeb's push to break up Amgen and whether its ex-banker CEO might be just the man to be receptive to such an idea.

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Two of the most popular trends in the capital markets were continued yesterday with a new example. A 100 billion dollar company was targeted by an activist investor in this case damn low the and he's calling for a break up which were seeing all over the place these days. This target is Amgen. And they are tech company 109 million dollar billion dollars from being he's he's going to attract basically the first track is saying okay. You spend it well too much and are indeed you haven't really had. Many results from that. In Europe that this just its profligate with your cash you just spend too much on you know. Is so ministry should break the Catholic are so so because that basically and then also stopped doing stupid acquisitions all all kind of sensible things for Amgen because they've. They've got a record kind of wasting cash and stuff. The other thing is he saying. And please please management consider the idea breaking up into two parts and it would be. All the drugs that are out there you know they did make a lot of cash in one company. And all the drugs that haven't hit the market in other company. Now we see in this summit this has come off it in the number of different. Generations in the route on the Biotech and pharma EA is never really see icicles ordered some air. Wise and power in the it's a lot of foreign companies have to have had. Consider this even ever done it because the problem is that Tom. Drugs eventually need to replenish them you know they got limited patent life and eventually they can raw patented drug dies and then you need new thing. To the problem is that you eat your cash cow is more to burqa or animal and eventually dies in a princely and say you need to love limits for somebody to hug. The other problem is that it companies often like you know that this company. Instead of dying what they'll do those that builds eventually they are actually no we want us to realize that we're gonna spend we're gonna actually start spending money in R&D you're gonna require companies. And the the young growth company eventually matures and becomes a dividend paying companies that are certainly seem a little bit of that and other industries other Viacom and CBS this put it off years ago. CBS is supposed to be his old broadcast network by commas as. Hit young cable networks and the and they are they different earlier so I certainly area. And and so but again the problem is even worse in farm because the the essence of it are dwindling eventually die. So we've seen a lot of companies consider this but no and actually done that who's in a couple by attacks. And do this but then again down there dirty younger stage so it's it's it's a little wild card for load here as we've. Do you put it on your column yesterday. Was is the CEO of Amgen to use the former investment banker and if anybody's gonna go favor can look at the numbers and save them actually you know it it just makes sense and financial engineering it's going to be it's going to be the engines the app. So there's a chance they may do that. There's another reason to unlike. Amgen's phones suddenly were called protein drugs biological drugs. And these the patent rules are a bit different so. It's very it's a lot harder to make the generic version of these drugs. So that it's not like the sales are gonna come here and instantly drop to zero what they're different they're waiting Orix blue need to send towards ground. It's if if any harm companies is. Can split and survive it probably Amgen are okay but I'll Nat and I will be back Marbury who views tomorrow.

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Breakingviews: Targeting Amgen

Wednesday, October 22, 2014 - 03:21