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Amgen ‘looking hard’ at striking deals using $27bn cash pile


https://www.ft.com/content/02106674-0867-11e8-9650-9c0ad2d7c5b5


Quote:
Amgen, the world’s largest biotech company, has said it is “looking hard” for deals to deploy its $27bn cash pile but warned it is struggling to find targets amid soaring valuations in the life sciences sector.

The note of caution comes as mergers and acquisitions activity in the healthcare sector recorded its strongest start to a year in more than a decade, with almost $32bn of global deals announced since the start of January.

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“We want to deploy any excess cash and our first priority is to do acquisitions and invest in the business,” said David Meline, Amgen’s chief financial officer, in an interview with the Financial Times.

But he added: “We see all of these deals announced, and we participate pretty actively in considering whether to bid, but we haven’t been able to come up with a business case that would make a return for our shareholders.

“We will keep pushing ourselves and keep looking ourselves, because we have lots of financial flexibility.”

He cautioned it would be difficult “as long as people are willing to pay levels above what we deem we can make a return on”.

Mr Meline was talking before the recent market gyrations, which have sent valuations for biotech groups lower.

Amgen’s stance runs counter to predictions of a deals frenzy from bankers and lawyers, who say they are working on more M&A leads than they have done in years.

The company’s warnings on valuations carry additional weight because it is among the pharmaceutical companies with the most firepower to do big-ticket acquisitions.