Barclays on Health Care Facilities: PMC Rejects OCR's Bid. Now What?
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Rating Summary:
3 Buy, 7 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
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Barclays on Health Care Facilities: PMC Rejects OCR's Bid. Now What?
Barclays analyst, Adam Feinstein, said, "Last night, Pharmerica (NYSE: PMC) announced that its Board of Directors voted unanimously to reject Omnicare's (NYSE: OCR) unsolicited bid to acquire PMC for $15 per share. We believe this action was expected and PMC's arguments against a deal remain consistent, including their view that Omnicare's bid undervalues PMC and that Omnicare remains unwilling to bear the regulatory risk of getting the transaction closed. Despite PMC's rejection of Omnicare's bid, we continue to believe that a transaction is possible. Consistent with our view originally published on August 24, we continue to believe that the synergies that Omnicare could generate from buying PMC provide Omnicare with significant levels of flexibility to find a way to get a deal done."
"We believe Omnicare should be able to generate $100 million-$150 million in
synergies if it buys PMC and, in a best-case scenario, the synergies could be as high as $200 million-$250 million (although, this is likely overly optimistic). Hence, we believe Omnicare has plenty of room to increase its bid for PMC (simply to win over PMC management and the board, and not necessarily because another bidder emerges) as well as the potential for Omnicare to agree to divest a large portion of PMC in order to win FTC approval."
Barclays analyst, Adam Feinstein, said, "Last night, Pharmerica (NYSE: PMC) announced that its Board of Directors voted unanimously to reject Omnicare's (NYSE: OCR) unsolicited bid to acquire PMC for $15 per share. We believe this action was expected and PMC's arguments against a deal remain consistent, including their view that Omnicare's bid undervalues PMC and that Omnicare remains unwilling to bear the regulatory risk of getting the transaction closed. Despite PMC's rejection of Omnicare's bid, we continue to believe that a transaction is possible. Consistent with our view originally published on August 24, we continue to believe that the synergies that Omnicare could generate from buying PMC provide Omnicare with significant levels of flexibility to find a way to get a deal done."
"We believe Omnicare should be able to generate $100 million-$150 million in
synergies if it buys PMC and, in a best-case scenario, the synergies could be as high as $200 million-$250 million (although, this is likely overly optimistic). Hence, we believe Omnicare has plenty of room to increase its bid for PMC (simply to win over PMC management and the board, and not necessarily because another bidder emerges) as well as the potential for Omnicare to agree to divest a large portion of PMC in order to win FTC approval."
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