Tag: Business

Series C-5: Historical and current altitude in foreign investments/M&A

Historical and current altitude in foreign investments/M&A

 

A holistic view

 

The 90s were years of significant changes in the investment regime in Brazil, which opened up

more space for private investment, whereas the policies to foster public investment grew more

horizontal and less discriminatory among sectors. Specifically with regard to the treatment

offered to FDI, there was a reversal of the anti-FDI movement begun by initiatives adopted in

the 80s, thus allowing foreign investors full access to the sectors newly opened to private

investment. The regulation in place ensures the FDI access to the market and practically

unrestricted national treatment in the area of goods, while maintaining some significant

constraints as regards both market access and national treatment in service sectors[1].

 

Foreign direct investment into Brazil boomed between 2009-2011, but had been slowing down ever since. After 3 consecutive years of decline in FDI inflows, they have managed to start up again. According to the World Investment Report 2018 published by UNCTAD, FDI inflows increased by 2% between 2016 and 2017 and reached USD 62.7 billion. During that period, the country recorded a 22% drop in FDI, with investments reaching USD 25.5 billion. In the first semester of 2017, that number was USD 32.4 billion. Brazil is the 4th largest FDI recipient in the world, and the largest in Latin America, attracting more than 40% of total flows of the region. However, FDI in the country declined during the first semester of 2018, mainly due to uncertainties and tensions related to the presidential elections, according to Unctad. Acquisitions by foreign companies and high consumer spending attracted investments in 2017. FDI inflows in the energy sector trembled, while investment in the transportation and storage sectors quadrupled and in the manufacture sector doubled. Despite attracting declining FDI flows in 2017, the oil sector is expected to play a key role in the country’s economic recovery. This progression is offset by a decline in FDI inflows in the extractive industry, the financial sector and real estate activities. FDI stock increased by 10% between 2016 and 2017, and reached USD 778 billion by the end of the year. In 2018, the main investing countries in Brazil were the Netherlands, the United States, Germany, Spain, the Bahamas, Luxembourg, the United Kingdom, Canada, France and Chile. Investments were mainly oriented towards oil and gas extraction, the automotive industry, financial services, commerce, electricity, paper production, ITC, storage and transportation, the food industry, and mining[2].

 

Current (2019)

 

Brazil appears poised to enter a new era of foreign investment that would have a powerful impact on the country’s infrastructure development and its economic fortunes following years of economic volatility. The goal of new President Jair Bolsonaro’s government is to increase total infrastructure investment via partnerships or privatization. The government’s ambitious plan to boost the economy includes doubling investment in infrastructure to approximately US$65 billion per year by 2022. It is hoped that much of this new investment will come from foreign investors – and the government is now making a concerted effort to attract foreign equity in ways that will put the country on a new path to growth[3].

[1] https://www.iisd.org/pdf/2004/investment_country_report_brazil.pdf

[2] https://en.portal.santandertrade.com/establish-overseas/brazil/foreign-investment

[3] https://home.kpmg/xx/en/home/insights/2019/03/brazils-infrastructure-and-privatization-market-is-heating-up.html

Series C-4: Competitive dynamics (2)

China: leads in UHV (ultra-high-voltage) transmission projects

 

China built its first UHV transmission line in 2007, aiming to ease energy pressure on the country’s commercial center Shanghai and Xiangjiaba, a remote city in southwestern China along the Yangtze River[1]. China has the world’s most UHV direct current lines, more than ten lines are under construction or already in use. UHV technology can transmit electricity over long distances with relatively low loss of power. And China is now exporting this technology. When it comes to transmitting electricity, Brazil has a lot in common with China. Both countries have a vast territory, with energy consumption areas located far away from hydropower resources[2].

 

In February 2014, a consortium made of 51% shares owned by SGCC and 49% shares owned by Eletrobras won the bid of Brazil’s Belo Monte Hydropower UHV Transmission Project (Phase I, total length 2,084 km, concession period 30 years)[3], [4].. In July 2015, SGCC independently won the bid for 2nd phase of Brazil’s Belo Monte Hydropower UHV Transmission Project (total length 2,518 km, concession period 30 years), outrunning Eletrobras and Spanish firm Abengoa [5].

 

The First Phase of Belo Monte Hydropower ±800kV UHV DC Transmission Project (Belo Monte I), jointly invested and constructed by Electrobras and State Grid, was put in operation in 2017 (2,076 km delivered with a capacity of 4GW)[6]. The second phase of the Belo Monte UHV power project in Brazil, spanning 2,543 kilometers, is likely to start commercial operations by the third quarter of this year, according to SGCC, the operator of the project[7],[8].

 

Besides SGCC, Shanghai Electric Group, China Three Gorges Corporation, China Communications Construction Company (CCCC) and Shanghai Pengxin Group Company are also expanding their presence in the country. Among the companies planning to invest in Brazil are China Southern Power Grid, China Huadian Group Corporation, China Huaneng Group Corporation, State Power Investment Corporation (SPIC) and China Guodian Corporation19.

 

Shanghai Electric Power Transmission and Distribution Engineering (SPTDE), a subsidiary of Shanghai Electric, in June 2017 signed a preliminary agreement with Eletrosul Centrais Elétricas S.A. (Eletrosul), a subsidiary of Eletrobras, to transfer control of transmission system development for the Rio Grande do Sul project. Brazil’s energy regulator Agencia Nacional de Energia Eletrica (ANEEL) awarded the project to Eletrosul during an auction organised in November 2014. The total investment was budgeted at BRL3.27 billion to enable the construction of about 1,900 km of transmission lines and seven substations, as well as the expansion of 16 existing substations. As per Eletrobras, the next stage of the negotiations will establish the detailed conditions of the business, through a binding agreement, including issues related to the implementation and operation schedule. Shanghai Electric will establish an SPE to construct, operate and maintain future projects. Eletrosul is likely to hold up to a 25 per cent interest in the SPE. This agreement with Shanghai Electric is the result of the public call launched by Eletrosul in 2015 for the selection of companies interested in establishing a partnership for the implementation of the auctioned project19.

 

Other foreign companies

 

In December 2017, France’s Engie SA, India’s Sterlite Technologies Ltd and Neoenergia SA, majority-owned by Spain’s Iberdrola SA, were among companies that won the right to build transmission lines. The event drew aggressive bidding, averaging 40% below ceiling prices set by regulators. The auction will spur 8.75 billion reais ($2.6 billion) in investment , in line with government expectations[9].

 

In December 2018, Indian power transmission developer Sterlite Power has won a lot in Brazil’s recent auction for transmission projects that will facilitate the development of Rio Grande do Sul state’s wind potential. Lot 13 represents an investment of about USD 0.6 bllion (EUR 527.4m) over three to five years. It involves the construction of six substations and 316 km (196.35 miles) of transmission lines[10]. The company’s investment in Brazilian transmission sector crosses USD 2bn[11].

 

Rio Madeira transmission link

 

Before the 2nd phase of Belo Monte transmission project, the Rio Madeira transmission link, with an overhead length of 2,385km, is the world’s longest power transmission line. The 600kV high-voltage direct current (HVDC) bipolar line was brought into commercial operation in November 2013 and is capable of transmitting 7.1GW of power[12].

 

The HVDC transmission line was constructed in 24 months by Interligação Elétrica do Madeira (IE Madeira), a consortium comprised of three major Brazilian energy providers. ABB supplied power equipment for three HVDC stations. Alstom supplied two HVDC bi-pole converter stations and four HVDC converter transformers for the project31. (Much of the early work on UHV systems was done by electrical engineering companies such as Siemens and ABB23)

[1] http://www.chinadaily.com.cn/business/2017-09/05/content_31573458.htm

[2] https://www.beltandroad.news/2019/03/17/bri-chinas-state-grid-builds-electricity-super-highway-in-brazil/

[3] http://www.sgcc.com.cn/html/sgcc_mobile_en/col2017113008/2018-07/19/20180719114734472929947_1.shtml

[4] https://www.reuters.com/article/us-china-electricity-grid-kemp/column-super-grid-china-masters-long-distance-power-transmission-idUSKBN0EU19B20140619

[5] http://www.stategrid.com.cn/html/sgid/col1230000133/2015-09/06/20150906143312478205153_1.html

[6] http://www.sgcc.com.cn/html/sgcc_mobile_en/col2017113008/2018-07/18/20180718164057688856936_1.shtml

[7] http://global.chinadaily.com.cn/a/201903/22/WS5c9437e1a3104842260b1eed.html

[8] http://www.xinhuanet.com/english/2019-04/05/c_137952512.htm

[9] https://www.bloomberg.com/news/articles/2017-12-15/after-year-with-none-brazil-holds-three-power-auctions-in-week

[10] https://renewablesnow.com/news/indias-sterlite-wins-wind-lot-in-brazil-transmission-auction-637641/

[11] https://www.sterlitepower.com/press-release/sterlite-power-wins-prestigious-transmission-project-brazil

[12] https://www.power-technology.com/features/featurethe-worlds-longest-power-transmission-lines-4167964/

Series C-3: Competitive dynamics (1)

Competitive dynamics

 

In terms of length, in 2017, State controlled Eletrobrás reached approximately 65,000 kilometers of electric power transmission lines with voltage higher than or equal to 230 kV, representing almost half of this type of lines in Brazil[1].

 

In a 2013 report, it is said that Private companies:~35 out of 45 companies in the transmission systems. o-existence between state-controlled and private companies. There are no limitations on the foreign ownership of electricity companies; however, every company must be incorporated under Brazilian law[2].

 

 

Note: Furnas, CHESF, Eletrosul are majorly  owned by Eletrobrás[3].

Note: CEMIG is controlled by The State of Minas Gerais[4].

 

Colombian firms

 

The second on the list of companies with largest transmission lines, CTEEP, is controlled by ISA, a Colombian state-owned company [5].

 

More recently, in March 2015, Empresa de Energía de Bogotá (EEB) entered the Brazilian market with the acquisition of a 51 per cent equity share each in four Brazilian power transmission companies. Under the deal, which cost EEB about USD170 billion, the company acquired Transenergía Renovável S.A., Transenergía São Paulo S.A., Goiás Transmissão S.A. and MGE Transmissão S.A. With this, the company acquired 1,094 km of power transmission network established at 500 kV, 345 kV, 230 kV and 138 kV, located in the states of Espírito Santo, Goias, Mato Grosso, Mato Grosso Do Sul, Minas Gerais and Sao Paulo. The remaining 49 per cent stake in the four Brazilian concessionaries is held by Furnas Central Electric SA (Furnas), a subsidiary of Eletrobras. In April 2015, EPM acquired a 22.14 per cent stake in Brazil-based local transmission utility Transmissora Aliança de Energía Eléctrica S.A. (TAESA) for BRL1.53 billion.[6]

 

The Colombian state-owned ISA Group is already an established player in Brazil’s transmission sector. In December 2016, ISA further strengthened its position by acquiring a 41.6 per cent equity stake in the transmission developer Transmissora Aliança De Energia Elétrica SA (TAESA), which currently holds 33 transmission concessions comprising 11,000 km of high voltage power lines in Brazil. In a BRL1.06 billion deal, ISA has acquired 26 per cent of TAESA’s ordinary shares and 14.9 per cent of its capital stock from Brazilian equity firms Fundo de Investimento em Participações Coliseu (FIP Coliseu) and Fundo de Investimento em Ações Taurus (FIP Taurus) 19.

 

Another acquisition deal that took place recently—in May 2017—in Brazil was for the concessionaire Interligação Elétrica Norte e Nordeste (IENNE). Under this, Companhia de Transmissão de Energia Elétrica Paulista (CTEEP)—a Brazil-based subsidiary of ISA—exercised its rights to acquire the entire equity interest of IENNE from Spain’s Isolux and local power company Construções e Participações S.A (Cymi Holding). Isolux holds a 50 per cent equity share and Cymi owns a 25 per cent equity share in IENNE. The deal cost CTEEP about BRL96.75 million, under which CTEEP purchased 164 million ordinary shares in IENNE from Isolux and 81.8 million ordinary shares from Rio de Janeiro-based Cymi Holding19.

[1] https://eletrobras.com/en/Paginas/Energy-Transmission.aspx

[2] https://publications.iadb.org/publications/english/document/Energy-Dossier-Brazil.pdf

[3] https://www.sec.gov/Archives/edgar/data/1439124/000119312512242237/d350457dex81.htm

[4] http://cemig.infoinvest.com.br/static/enu/estrutura_acionaria.asp?idioma=enu

[5] http://www.isacteep.com.br/en/isacteep/cteep-history

[6] https://www.globaltransmission.info/archive.php?id=30033

Series A-5: What problems are these companies facing in hiring talents, conducting trials or launching products?

 

  • Talents

The lack of talents has been a well-recognized problem for China’s biotech industry[1]. China lacks seasoned experts with at least 10 years’ industry experience, say insiders. Companies are especially keen on experience in translational medicine, early-stage clinical trials and antibody manufacturing. Start-up biotech firms need experienced managers at every level, from clinical trials to drug manufacturing processes, to help build their companies[2].

 

This path from multinational drug company to biotech is clearly seen in the bios of many of the more ambitious start-up founders. Returnees with a few years under their belt in China and an ability to effectively navigate the system are far more valuable to employers than new arrivals. It becomes fairly common that multinational biopharma firms are finding themselves battling Chinese biotechnology startups to attract talent38,[3]. Those startups flush with cash from venture-capital financing are willing to pay top dollar (and upsides with options).

 

  • Trials

In terms of conducting trials, a historical lack of clinical research infrastructure in China has led to problems adhering to Good Clinical Practice, the international gold standard for maintaining ethical and quality standards in clinical trials. As an example, nearly all clinical research sites in China are hospitals, as there are no private practices. Because of that, clinical trial participants are treated exactly the same way as regular patients. That’s a problem because study staff — who are regular hospital employees — don’t have experience complying with Good Clinical Practice, putting the trial’s integrity, not to mention patient protection, at risk[4],[5].

 

Meanwhile, the rapid growth of Wuxi AppTex (and its affiliated Wuxi Biologics) has made itself one of the largest CRO/CMO players in the world[6], helping to facilitate drug discovery/development/manufacturing globally.

 

  • Launches

 

As most Chinese biotech startups are still in the r&d stage, only a few were approved recently. The most relevant example here might be the PD-1/PD-L1 space.

 

CFDA has long been seen as “slow” in terms of new drug approvals. A 2016 discussion quoted that usually a new drug needs 5-10 years for approval[7].

 

However, for the recent domestic PD-1 drugs for cancer, the approval speed was amazingly fast. Junshi won the first made-in-China PD-1 drug approval by NMPA (formerly CFDA) in December 2018[8]. Ten days later, the second PD-1 drug by Innovent was approved[9]. Each took 284 and 255 days respectively[10].

 

Two foreign PD-1 drugs, Merck’s Keytruda and Bristol-Myers Squibb’s Opdivo, were approved earlier in 2018. During 18Q3, Keytrude and Opdivo recorded ¥150 and ¥190 million in sales respectively[11].

 

Junshi started its sales in February 2019 and recorded nearly ¥80 million in the first quarter[12]. Innovent’s PD-1 launched its sales in March 2019 and finished the first quarter with $9.9 million in revenue, both of which are deemed as successful in media reports[13].

[1] https://www.kornferry.com/institute/download/download/id/17053/aid/219

[2] https://www.huamedicine.com/upload/down/5870180130135508.pdf

[3] https://www.ft.com/content/d3a2de0e-6fbb-11e8-92d3-6c13e5c92914

[4] https://www.statnews.com/2018/08/03/china-clinical-trials-infrastructure-transparency/

[5] http://www.appliedclinicaltrialsonline.com/running-clinical-research-china

[6] https://explorebiotech.com/top-cros-usa-contract-research-organization/

[7] http://journal.healthpolicy.cn/html/20160304.htm

[8] https://endpts.com/junshi-wins-the-race-for-first-made-in-china-pd-1-approval-as-execs-reap-394m-ipo-harvest/

[9] https://endpts.com/china-greenlights-second-homegrown-pd-1-in-10-days-as-innovent-celebrates-its-first-drug-ok-with-eli-lilly/

[10] https://www.bjcancer.org/Html/News/Articles/9321.html

[11] https://www.yicai.com/news/100135300.html

[12] https://xueqiu.com/8965749698/125984469

[13] https://finance.sina.com.cn/roll/2019-05-06/doc-ihvhiews0153982.shtml

Series A-4: Are companies building drugs for the Chinese market or the western/US market?

Mostly Chinese.

 

According to IMS, China’s spending in medicine has been growing fast, reaching $137 billion in 2018[1].

 

 

Another research database shows that in 2018, China’ exports in medicine was $17.4 billion[2] and imports was $29.6 billion[3].

 

Although they might use different sources/measures, we could roughly estimate that in 2018, non-import medicine consumption was 137-29.6 = 107.4 billion and domestic medicine production was 107.4+17.4 = 124.8 billion.

 

Therefore, 86% of Chinese drug companies’ production was for the domestic market while 14% was for exports in 2018.

 

For the more modern (or newly funded) innovative biotech/drug companies in China, they are targeting the global markets. Usually they will divide the commercial rights by regions and retain the greater china rights while sell the rest (another source of funding). Some innovative drug candidates’ global rights ex china have already been licensed/acquired by western/US pharmaceutical companies. Most Chinese biotech companies don’t have the capability to develop/commercialize outside the greater china area.

[1] https://www.iqvia.com/institute/reports/the-global-use-of-medicine-in-2019-and-outlook-to-2023

[2] http://s.askci.com/news/maoyi/20190624/1150071148256.shtml

[3] http://s.askci.com/news/maoyi/20190625/1430421148825.shtml

Series A-2: What diseases are they working on?

UBS summarized in its China’s biotech report – “Oncology: A driving force for innovation in Chinese biotech”.

An article by Pharmacodia in 2017 said the top 3 therapeutic areas for biologics in China are cancer, rheumatoid arthritis (RA), hepatitis B virus (HBV)[1].

Another bluebook in 2017 outlined the five focus areas for China’s biotechnologies[2]: 1) vaccines, 2) mAb and protein drugs for cancer, cardiovascular, neurodegenerative, diabetes, autoimmune diseases, 3) diagnostics and screening for major diseases, 4) gene therapies, cell therapies, 5) regenerative medicine

China suffers from an unusually high incidence of cancer, which has been the country’s leading cause of death since 2010. Nearly all companies (five out of six) went onto HKSE in 2018 are investing in oncology (except for Hua Medicine focusing on diabetes).

Among all the cancers, lung cancer is the most targeted disease due to the high incidence rate in China.

Globally, oncology is also the No.1 focus for the overall industry, accounting for more than 1/3 of the total pipeline, according to a 2018 report[3].

To develop cancer treatments, biotech companies usually focus on developments in mAbs (monoclonal antibodies), immuno-oncology, CAR-T therapies, etc.

Other breakthrough researches & developments including Qinghaosu (or Artemisinin), discovered by the team led by Youyou Tu to fight malaria.

[1] http://classic.hsmap.com/news_info/4080.html

[2] https://hsmap.com/static/bluebook.pdf

[3] https://pharmaintelligence.informa.com/resources/product-content/sitecore/shell//~/media/informa-shop-window/pharma/files/pdfs/pharma-rd-annual-review-webinar-2018-slides.pdf

Teva (4): Acquisition

Understanding Teva’s genes

[an excerpt from Knowledge@Wharton: Changing the Prescription for Israel’s Teva]

The (generic drug) industry began to consolidate during the 1960s and 1970s, and Teva emerged as the largest and most dynamic firm in the sector, thanks primarily to Eli Hurvitz, who served as CEO from 1976 to 2002 and as chairman from 2002 to 2010.

Opportunity knocked on Teva’s door when the U.S. Congress passed the Hatch-Waxman Act in 1984. The legislation created incentives for generic drug companies to challenge other firms’ patents, even before they expired, with the goal of reducing the cost of drugs in the U.S. Hurvitz positioned Teva to use Hatch-Waxman as its springboard to becoming a major player in the generics sector.

“Teva succeeded in its strategy,” says Steven Tepper, an Israeli analyst who has been following Teva for many years. “It not only worked really hard at getting its production costs down, it also developed considerable expertise in the legal aspects of the generic drugs business — how to be the first to file for generic versions of patented drugs [the law awarded a period of exclusivity to the first generic version, during which time profit margins would be higher], and how to manage the testing and licensing process. Later, Teva became adept at acquiring other companies and integrating them into the group.”

The strategy worked so well that today, Teva is the largest generic drug company in the world. Achieving this designation was a conscious decision on the part of Teva’s leadership: It was achieved via a series of large acquisitions over a five-year period, beginning with IVAX, an American rival bought for US$7.4 billion in January 2006; Barr (also in the U.S.) for US$7.46 billion in December 2008; German company Ratiopharm in March 2010 for US$5 billion, and Cephalon in May 2011 for US$6.8 billion.

“Levin was instrumental in bringing Michael Hayden to Teva as head of R&D, and together they formulated a corporate strategy for Teva that distinguished it from its competitors and also explains why Teva had to acquire either Mylan or Allergan,”

“Levin and Hayden sought to marry Teva’s proven capabilities in the efficient production of generic drugs with the company’s in-house R&D capabilities, themselves enhanced by a series of acquisitions. The goal is to turn generic drugs into specialty products, for instance by giving them a special formulation or method of application — something that doesn’t change the essence of the drug, but de-commoditizes it and allows for a higher price, higher margins and hence greater profitability.”

– Steven Tepper, pharma and biomed analyst at Migdal Capital Markets and regarded as a top Israeli analyst in this sector

The environment for Teva in 2015

[Knowledge@Wharton: Why Teva Paid $40.5 Billion for Allergan’s Generic Business]

    • The number of ‘ethical’ or proprietary drugs coming off patents in the next few years is going to be much smaller than has been the case over the past decade or so
    • The drug producers are facing a rapid process of concentration among their main buyers — especially in the critical U.S. market, where there are now three dominant companies. This, in turn, is forcing the manufacturers to consolidate their ranks, so as to better match the greater bargaining clout of their customers. The entire pharma industry is caught up in a whirlwind of enormous deals. Data from Thomson Reuters shows that as of July 23 — prior to Teva’s Allergan acquisition — M&A deals in the health care industry so far this year totaled almost $400 billion and were up some 80% over the equivalent period of 2014
    • With Copaxone’s patents going to expire, Teva needs to find supports to drive the growth or to make-up the hole – manage the “patent cliff” and the stock price

There were three acquisition targets: Sandoz (Novartis), Mylan and Actavis (Allergan).

First proposal: Mylan

On April 21, 2015, Teva proposed to acquire mylan for $82.00 per share in cash and stock. ($40 billion acquisition, 50 percent cash and 50 percent stock)

Just two weeks before, Mylan made an offer to acquire Perrigo with a 25% premium, which failed later in November.

A timeline compiled by Reuters.

April 8, 2015: Mylan offers to buy Perrigo for about $29 billion in cash and stock in a move that some analysts suggested was an effort to help fend off a $40 billion acquisition by larger rival Teva Pharmaceuticals Industries

April 24, 2015: Mylan goes hostile with a sweetened bid of $60 plus 2.2 Mylan shares, valuing Perrigo at $31 billion; Perrigo rejects offer

April 27, 2015: Mylan rejects Teva’s offer

April 29, 2015: Perrigo rejects Mylan’s second raised bid of $75 and 2.3 Mylan shares for every Perrigo share, or $34.1 billion

April 29, 2015: Teva sends letter to Mylan’s Board

July 23, 2015: Dutch foundation linked to Mylan adopts poison pill in efforts to block takeover by Teva, citing potential job losses

July 27, 2015: Teva drops its hostile pursuit of Mylan, decides to buy Allergan Plc’s generic business in a deal worth $40.5 billion

Aug. 13, 2015: Mylan lowers the percentage of Perrigo shares it needs to control the company to just over 50 percent from its original plan of 80 percent

Sept. 14, 2015: Mylan launches a tender offer in a move to lure Perrigo investors to support its take-over efforts

Sept. 17, 2015: Perrigo recommends shareholders to reject Mylan’s tender offer, which was set to expire on Nov. 13, saying it substantially undervalued the company

Oct. 22, 2015: Perrigo announces its plans to lay off 6 percent of its global workforce and buy back shares worth $2 billion

Nov. 13, 2015: Mylan fails $26 billion bid in tender offer as it was unable to secure at least half of Perrigo’s shares

After Mylan’s acquisition of Perrigo failed, Mylan shares were up about 10 percent at $47.39 in premarket trading, while Perrigo’s were down 9.3 percent at $141.99.

Teva said its offer should be more attractive to Mylan shareholders than the proposed purchase of Perrigo, representing a 48 percent premium to the company’s share price before speculation of a deal surfaced on March 10. When Teva made the proposal, Mylan shares were up 8.9 percent at $74.12 in afternoon Nasdaq trading, while Teva rose 2.0 percent to $64.55 on the New York Stock Exchange. Perrigo fell 2.2 percent to $193.79. (Reuters)

Plan B: Allergen

On July 27, 2015, Teva made an offer to buy Allergan’s generics unit with $33.75 billion in cash and Teva shares valued at $6.75 billion (close to 10% stake in Teva).

  • pro forma revenues of approximately $26 billion and combined EBITDA of approximately $9.5 billion anticipated in 2016.
  • No shareholder vote required at Teva or Allergan
  • Mylan shares fell nearly 14% to $57.03 Monday, while Perrigo gained 3.8% to $193.67.
  • For Allergan, the Teva deal provides it with cash to pay down debt and allows the company to focus more on lucrative brand-name drugs.

[WSJ: Teva to Buy Allergan Generics for $40.5 Billion]

Source: Teva Presentation

Teva Presentation of Actavis Acquisition

Question: how to finance the deal…

According to Teva’s Q2 2015 result,  at June 30, 2015

    • cash and investments: $2.8 billion.
    • short-term debt: $3.0 billion
    • senior notes and loans: $9.5 billion

Shared Bikes In China (5)

So how many shared bikes are needed?

Beijing is the city in focus.

In April 2017, Beijing (北京市交通委) published a guideline (draft for consultation) to regulate shared bikes. [A usage survey conducted at that time in Beijing]

Beijing had around 700k shared bikes by April 2017, and more than 1.6 million by September 2017. (numbers are for registered bikes, not including non-registered)

The number of shared bikes reached its largest in September 2017 (2.35 million; then new deployments were suspended). Other cities also set the cap (Shanghai 1.5 million, Guangzhou 0.9 million, Nanjing 0.45 million).

The number declined to 1.91 million by August 2018, which was the second hard limit set by City of Beijing. (mobike 0.699, ofo 0.907, other 7 companies 0.3)

It was expected that the cap would continue to decline. From January to May 2019, only 1.2 million of the 1.91 million bikes are used at least once.

Other cities have downsized the number of shared bikes as well: main area in Chengdu 1.8 million -> 0.75 million; Shenzhen 0.89 -> 0.6 million

Beijing has a population of more than 21 million: so on average every shared bike will cover 11 people. (using 1.91 million here)