Archive for September, 2009

Solvay sells drugs unit to Abbott for $6.6 billion (Reuters)

Sunday, September 27th, 2009 | Finance News

AMSTERDAM (Reuters) –
Belgian drugs, chemicals and plastics maker Solvay (SOLB.BR) said on Monday it would sell its drugs unit to U.S. partner Abbott Laboratories (ABT.N) for 4.5 billion euros ($6.6 billion) in cash and reinvest in chemicals and plastics.

Abbott had agreed to buy the unit to bolster its flagging prescription drug business by giving it a number of new medicines in late stages of testing, sources familiar with the deal had earlier told Reuters.

"We are building a new refocused group with the financial means to further accelerate sustainable growth," Solvay's board chairman Alois Michielsen said in a statement.

The enterprise value of the deal is 5.2 billion euros, including 4.5 billion in cash, additional potential milestone payments of up to 300 million euros between 2011 and 2013 and liabilities of about 400 million euros.

"In anticipation of future market needs, we are ensuring we have the technologies, products, infrastructure and reach," Abbott Chief Executive Miles White said in a statement.

Abbott said the deal will add $0.10 to ongoing earnings per share in 2010, doubling to more than $0.20 by 2012 and increasing thereafter, all before one-time transaction-related items expected to occur in 2010-2012.

Abbott said it would fund the deal with available cash.

JP Morgan said in a research note that the 5.2 billion euros price significantly exceeded market expectations of 4 to 4.5 billion euros, although in line with its valuation of 5 billion.

"The lack of cash returns (e.g. a special dividend) on the back of the deal may be viewed as a disappointment to some investors, but we view this as positive long-term given it emphasizes Solvay management's commitment to investing and growing the core chemicals and plastics businesses."

JP Morgan has a "neutral" rating on the stock. The pharma sale price implies a sum-of-the-parts valuation of Solvay of 82 euros/share.

EXTERNAL GROWTH

Solvay said the proceeds from the deal will be reinvested in external and organic growth in strategic projects in chemicals and plastics with a sharp focus on long-term value creation.

Studies about such reinvestments are ongoing, it added.

"What is important is that we have the cash in house. What we will aim at is reinvesting in activities securing a sustainable growth," Solvay Chief Executive Christian Jourquin told reporters.

He added that Solvay's drugs unit had provided the firm with low cyclicality, less exposure to energy costs and high-added value and that this would be the criteria that would guide Solvay's reinvestment policy.

"We consider the change in the business model for pharma will considerably change the size and structure of the business, so what is important is to know when you have to exit a business," Jourquin said.

Abbott co-markets with development partner Solvay the cholesterol treatments TriLipix and Tricor. It is also working in the U.S. on a combination cholesterol treatment with AstraZeneca (AZN.L) using TriLipix as Solvay pursues the development of a combination treatment for Europe and elsewhere.

The deal will bring Solvay's treatments for Parkinson's disease, Meniere's disease (abnormality of the inner ear), vertigo, and irritable bowel syndrome to Abbott's presence in cardiovascular disease, neuroscience and gastroenterology.

The deal also includes Solvay's vaccines business.

Solvay's Dutch cell-based flu vaccine production facility -- which can produce both seasonal and pandemic influenza vaccines -- was validated earlier this month after a final inspection by Dutch authorities.

Cell-based technology is thought to be more efficient than using chicken eggs and offers greater production scale.

The transaction is expected to be closed in the first quarter of 2010, pending approval by competition authorities and Solvay said it communicate the impact of the deal on its results when finalized. ($1=.6810 euros)

(Additional reporting by Philip Blenkinsop in Brussels, editing by Hans Peters and Mike Nesbit)

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Australia court allows claims against Lehman (Reuters)

Sunday, September 27th, 2009 | Finance News

SYDNEY (Reuters) –
An Australian court has ruled that local governments can pursue financial claims against collapsed U.S. investment bank Lehman Brothers in Australia and elsewhere, a firm that is funding the litigation said on Monday.

IMF (Australia) Ltd (IMF.AX) said the Federal Court ruled on Friday in favor of town councils and others which had lost money in collateralized debt obligations marketed and issued by Lehman, opening the door to legal claims to recover their losses.

"The full court found against the validity of a Deed of Company Arrangement which had the effect of preventing the councils and others from pursuing claims against various Lehman entities in Australia and elsewhere and from pursuing payment under various insurance policies," IMF said in a short statement.

"IMF will now fund those councils and other parties in litigation to recover monies lost when they invested in collateralized debt obligations arranged, issued and promoted by those Lehman entities."

Lehman's estate is facing a slew of claims from creditors worldwide, including bondholders, derivatives counterparties, states, towns and individuals.

Administrators of the London arm of Lehman Brothers said last month the claims it is handling against the collapsed Wall Street bank could total as much as $100 billion.

Lehman's demise a year ago brought the global financial system to the brink of collapse and accountants and lawyers expect to have to work for years to sort out billions of dollars worth of assets left locked in its accounts.

About 35 councils in Australia invested A$25 million ($22 million) in Federation CDO, a long-term, synthetic instrument based upon a list of 40 residential mortgage-backed securities linked to the U.S. sub-prime market, financial magazine the Government News said in a report in April.

(Reporting by Mark Bendeich and Cecile Lefort; Editing by Jonathan Standing)

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Madoff sons, brother, niece to be sued: report (Reuters)

Sunday, September 27th, 2009 | Finance News

NEW YORK (Reuters) –
Epic swindler Bernard Madoff's two sons, his brother and a niece will be sued this week for $198 million, the trustee winding down the Madoff firm told CBS News' "60 Minutes" broadcast on Sunday.

Sons Mark and Andrew, brother Peter and niece Shana all held executive positions with the firm and should have known about the multibillion-dollar, worldwide 20-year-long Ponzi scheme, trustee Irving Picard and his chief counsel David Sheehan, told the program.

Wall Street's biggest investment fraud, a Ponzi scheme in which early investors are paid with the money of new clients, collapsed in the declining economy last December. Madoff confessed to the fraud of as much as $64.8 billion and is serving a 150-year prison sentence.

Asked by "60 Minutes" whether investigators were working under the assumption that there was money still hidden, Sheehan said: "Yes, we are" and Picard said, "We'd assume it's millions and millions of dollars."

Sheehan told "60 Minutes" he estimated about $36 billion went into the whole scheme. "About $18 (billion) of it went out before the collapse. And $18 (billion) of it is just missing. And that $18 billion is what we're trying to get back."

New York lawyers Picard and Sheehan said the latest lawsuit to recover money for defrauded investors under the Securities Investor Protection Act would accuse the family members of negligence and breach of fiduciary duty. The lawsuits to be filed in U.S. bankruptcy court in New York would also accuse them of profiting personally in the tens of millions of dollars while working at the firm.

All of the family members have said in previous statements that they had no knowledge of Madoff's crimes.

The sons withdrew $35 million from accounts with little or no investment, Picard told "60 Minutes".

"Whether or not they have a criminal problem we will pursue them as far as we can pursue them," Picard said. "And if that leads to bankrupting them---then that's what will happen."

The trustee and his lawyers have filed 13 suits already in an effort to recover about $15 billion, including one against Madoff's wife Ruth and several claims against so-called Madoff feeder funds.

Only $1.5 billion has been recovered so far and the estimates for the actual money that was lost in the fraud have varied from $13 billion to $64.8 billion.

The case is Securities Investor Protection Corp v Bernard L. Madoff Investment Securities 08-01789 in U.S. Bankruptcy Court for the Southern District of New York (Manhattan)

(Reporting by Grant McCool; Editing by Diane Craft)

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