Biotech Values

[DewDiligence]

Re: NVS-ACL deal

I think the offer is fair since NVS is undervalued relative to long term valuation metrics.

I, too, think the deal is fair, but not because NVS is necessarily undervalued. Rather, NVS overpaid to some degree to entice Nestlé to cede control of ACL, and the minority shareholders benefitted by simply going along for the ride.

If one ignores what NVS paid Nestlé and evaluates how much ACL is worth absent a control premium according to any conventional valuation metric, the result is a figure considerably less than what NVS is offering. (Moreover, the deal terms for ACL’s minority shareholders are tax-friendly, although this doesn’t benefit such shareholders as pension funds and tax-exempt foundations.)