'People' Archive
Perhaps Martha Stewart should have held onto that ImClone stock a little longer. Not only would she have avoided jail time, but she might have earned a little more bang for her buck. Bristol-Myers Squibb’s $4.5 billion bid to acquire the 83% of ImClone it doesn’t already own values the company’s shares at $60 a pop (ironically, the same price that triggered Martha’s stock ditch in 2001). But speculation over the deal has already raised the stock’s price tag above that bar and ImClone has hinted that it may seek a higher offer.
BMS’s unsolicited takeover attempt marks the second large biotech takeover attempt by a big-name pharmaceutical firm this summer (the first was Roche’s bid for Genentech) and is part of the larger and seemingly intensifying trend of the pharma industry’s shift towards biopharmaceuticals. (It’s a sign of the times, but also of dwindling revenues from traditional drugs.)
What is BMS hoping to gain through the purchase? While ImClone only has one commercial product (cancer treatment Erbitux, which is approved to treat colorectal, head, and neck cancers), that single product brings in over $1 billion in annual revenue. ImClone also has a pipeline of similar antibody-based cancer drugs, and it is pursuing additional indications for Erbitux. If the company’s development candidates make it to market ImClone will also hold a corner on treatments for lung, pancreatic, breast, prostate, and ovarian cancers.
So despite a history laden with patent disputes, management shake-ups, and stock-trading scandals, ImClone represents an opportunity for growth to the struggling BMS. Whether ImClone accepts the offer is another question. The biotech indicates that it may decide on another course to maximize shareholder value, such as the separation of its Erbitux and development operations into two companies. The deal’s success will also largely depend on the opinion of ImClone chairman Carl Icahn, the formidable investor who has already voiced his doubts on the BMS offer.
Friday’s annual meeting of Yahoo! shareholders will be anticlimactic, thanks to a deal worked out last week between the company and activist investor Carl Icahn, who owns about 5% of Yahoo!’s shares.
Icahn called off his proxy challenge, striking a settlement agreement with Yahoo!’s board and management. Basically, one incumbent director will leave the board, the board will expand from nine to 11 seats, and two of the three vacant seats will be filled by Icahn and former AOL CEO Jon Miller, with Icahn to name a third director. (Please let it be Mark Cuban!)
Icahn briefly blogged on the settlement, which is so 21st century, of this aborted proxy battle.
What brought about this rapprochement? As others have noted, one event that may have tipped the balance and caused Icahn to seek a deal was the declaration by Legg Mason the week before that it planned to vote its shares in favor of the management nominees at the Yahoo! annual meeting. Bill Miller, the manager of Legg Mason’s flagship Value Trust fund, loudly criticized Yahoo!’s board and management for scaring off Microsoft, yet decided in the end to go with the devil he knew. Icahn reportedly saw Yahoo!’s institutional investors circling the wagons around the incumbent board and management and apparently decided against suffering a public defeat.
For their part, the Yahoos in Sunnyvale, California, knew they were about to report mediocre results from their second quarter, so they also had an impetus to come to an arrangement with the barbarians at their gate.
This sally by Icahn is looking like his crusade against Motorola — he buys a small but significant stake in the target company, blusters about the sins of the board and management, pulls together a proxy bid, and then calls it off in exchange for seats on the board for him and some cronies. It remains to be seen whether the Yahoo! episode will play out like Motorola did, with the CEO banished and the company broken up.
Meanwhile, the Evil Empire in Redmond, Washington — excuse me, I mean Microsoft — is officially washing its hands of any interest in all or part of Yahoo!, and turning to its own knitting to defeat Google. Knit one, Perl two? (A little coding humor.)
Yahoo!’s not out of the woods, with Congress scrutinizing its search advertising deal with Google and some shareholders still mad about losing out on $33 a share in cold, hard cash from Microsoft. (The stock closed Monday at $20 and change.) Not much yodeling going on at Yahoo! HQ these days.
The drumbeat of bad news continues for Wachovia, the fourth largest bank in the US. New CEO Bob Steel, the former undersecretary of the US Treasury who joined the company two weeks ago, certainly has his work cut out for him. The company announced Tuesday that it posted losses of nearly $9 billion in the second quarter of 2008, wrote off some $6 billion in assets, set aside more than $5.5 billion to cover future losses, is cutting dividends by 90%, and is eliminating approximately 10,000 jobs, including the layoffs of more than 6,300 employees.
At the crux of Wachovia’s troubles are so-called Pick-A-Pay mortgages, which allow borrowers to choose one of four monthly payment options. The bulk of these loans, most of them acquired when Wachovia bought Golden West Financial in 2006, are secured by homes in the hard-hit Florida and California real estate markets. The default rate of Wachovia’s $122 billion worth of Pick-A-Pay loans is hovering around 6%, and the company says that figure could balloon to 12% by 2009. (The national average for all mortgage defaults is currently around 1%.)
Wachovia has already raised more than $8 billion in capital from investors in 2008 alone, but may also be compelled to divest some of its operations in order to bring in more money. The most obvious candidate to be sold, according to some analysts, is the company’s Wachovia Securities subsidiary. It is perhaps Wachovia’s most successful business, though it has seen its assets under management dwindle by some 10% since its acquisition of A.G. Edwards last year. What’s more, Wachovia Securities’ St. Louis headquarters were raided last week by Missouri state regulators seeking information on the unit’s sales, pricing, and marketing of auction-rate securities after the market for the arcane financial instruments collapsed in February. [UPDATE: Please see the comment from Wachovia spokesperson Teresa Doughery regarding the state's actions.]
For its part, Wachovia is determined to weather the storm. Still, JPMorgan Chase is mentioned as a possible buyer of Wachovia Securities, if not all of Wachovia.
Some television history was made with yesterday’s Emmy nominations. For the first time, two basic cable series, FX’s Damages and AMC’s Mad Men, scored best dramatic series nods, officially cementing the channels further up the dial as serious original programming players to be reckoned with. What’s more stunning was not only that Mad Men scored the most drama nominations of any program at 16, but that it is in a field of six shows — up from the usual five. That says to me that the Academy of Television Arts & Sciences wanted to recognize the period piece about the early days of Madison Avenue so badly that they boosted the field rather than cut something else. (Although the continued presence of the sophomorically stupid Boston Legal in this category baffles me to no end.)
I’ve blogged before about basic cable’s recent evolution from second-tier exhibitor of reruns and edited-for-television movies to full-blown networks with original shows that are now serious buzz and ratings competition for the broadcast stalwarts of NBC, ABC, CBS, and FOX. First came the ratings and now come the accolades. (Otherwise known as the Tony Montana Principle: “In this country, you gotta make the money first. Then when you get the money, you get the power. Then when you get the power, then you get the women.” Well, in this case the women would actually be Emmys, but you get the idea.) This is proof that any business — no matter how historically dominant the big players might be — can be shaken up.
The Emmy nominations also continue to provide further proof of the diminished clout of HBO post-Sopranos, Six Feet Under, Sex and The City, etc., and that rival Showtime has largely stepped in to take its place. For the first time in 10 years, the network didn’t have a contender in the Best Drama category. Instead, Showtime’s serial killer drama Dexter scored a nod. HBO is still represented in the Best Comedy category with nominations for Entourage and Curb Your Enthusiasm, and it also did well in the Made for TV Movies — Recount, which I liked but, man, was that a painful experience to relive — and Miniseries categories. In fact, in the latter, HBO’s John Adams, the biopic about the second US president was the most nominated program of them all, scoring a whopping 23 nods.
Some other pleasant surprises this year: the return of Lost to the Best Drama category after it regained its footing with an outstanding fourth season; continued love shown to The Office for Best Comedy (when work gets bad, I have only to look as far as Dunder Mifflin and say, “At least I don’t work there.”); that they gave props to three of the funniest characters on TV with noms for How I Met Your Mother’s Neil Patrick Harris (”Legendary!“) and Entourage’s Jeremy Piven and Kevin Dillon (all manner of quotes I can’t repeat on a family website).
Perhaps the biggest surprise was the Academy’s willingness to shake things up this year. The Emmys have long been criticized for nominating the same shows and performers over and over again, regardless of quality, and rightly so. It was always very difficult for new blood to break into the race, but this year turned that story on its head. Sure, there’s still some same ‘ol that is expected and boring (Mariska Hargitay and Tony Shalhoub for the millionth time), the mind-boggling “Whys?” (the aforementioned Boston Legal and its hammy actors, Two and a Half Men, and, I’m sorry, but I just don’t get 30 Rock), and the inevitable snubs (Friday Night Lights, never even a bridesmaid much less a bride, and where are my Desperate Housewives in any of the acting categories?). But overall the Emmys finally seem to be getting it more right than not.
Now we just have to see if it holds up when the statues are handed out.
Delighted dolphins, giddy gators, happy herons. What is all this wildlife wonderment about? It seems these and the many other species of fauna and flora that inhabit the Florida Everglades may have been given a pass from extinction. And for once, mankind is not the villain in this tale. In fact, one man, Florida governor Charlie Crist, might be its hero.
Seems the guv had a meeting sometime back with the nabobs at U.S. Sugar Corporation, the largest cane-sugar producer in the country. They, like all good Big Sugar companies are wont to do, went to call on Gov. Crist to complain about Florida enacting some laws that forbade the company from pumping its polluted water back into the Everglades.
Expecting due deference from the guv and a “pat on the back” solution allowing the sugar maker to skirt the new laws — they, again, like all good Big Sugar companies, being large contributors to political campaigns, mostly to pro-business Republican candidates — U.S. Sugar got instead an unexpected, nay, shocking offer. The governor suggested that Florida buy U.S. Sugar. No need to find a way around ever-increasing environmental regulations, just go out of business — and with a pretty penny in its pocket too — $1.75 billion.
It’s a nice bit of money for U.S. Sugar, which has suffered bottom-line woes due to increasing sugar imports from countries such as Brazil and Thailand, which have lower labor costs. (Not to mention having to do continual battle with both the state and the feds over water and land pollution and the rising costs of the clean-ups it is forced to make by these authorities.) The company is also involved in a nasty lawsuit brought by former employees, charging that the company bilked them out of their retirement funds. The deal offered by Crist amounted to some $350 a share, far above other offers it has received over the years. So U.S. Sugar, which has operated on its land since 1931, said, yes, it would sell itself to the state.
And what does Florida get for its pot of gold? It gets, among other assets, 187,000 acres (or about 300 square miles) of land north of Everglades National Park, which the state would turn over to its South Florida Water Management District for use as part of a plan to help restore the Everglades’ pre-development ecosystem. (Cue the dancing endangered animals.)
The land would connect (or reconnect, actually) Florida’s Lake Okeechobee with the so-called River of Grass, the swampy natural waterway that carries overflow from the lake to its natural runoff into the ocean. The waterway, which is made up of marshes and forests rich in reptile and bird life, has been unable to drain itself adequately for years due to development, including sugar farming, and that has led to the stagnation of Lake Okeechobee’s waters.
So the Everglades’ ghost orchids and royal palms can perhaps sway in joy; their death knell has been silenced. Maybe. You see, despite the efforts of the Caped Crusader of the Everglades, Gov. Crist, and the, ahem, pragmatic decision by the elders of U.S. Sugar to sell, the deal might not go through. It seems that U.S. Sugar is owned by its 1,700 employees through an employee-ownership plan. And while the buyout deal allows U.S. Sugar to operate for another six years in order to fulfill its long-term commitments, after that, its employees are facing certain unemployment. Saying it will be regulated out of business anyway, the company has offered its wage earners one year’s pay as severance, with salaried workers being offered two years. The state has offered retraining. The deal is supposed to be finalized by November.
Put yourself in the place of a third-generation sugar worker, living in the small Florida town of Clewiston, being forced to weigh the relative merits of the survival of, oh, say, a rare panther and putting food on his or her family’s table. It’s a tough call.