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California M&A surge could reach Tri-Counties’ corporate world

By   /   Friday, June 6th, 2014  /   Comments Off

There are signs that the takeover wave that’s engulfed many sectors, notably pharmaceuticals and high-tech, may soon wash up on the beaches of the Tri-Counties.

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Henry Dubroff

Henry Dubroff

There are signs that the takeover wave that’s engulfed many sectors, notably pharmaceuticals and high-tech, may soon wash up on the beaches of the Tri-Counties.

By now, everybody with a set of earbuds knows that Apple is buying Santa Monica-based Beats Electronics for $3 billion. That deal made headlines worldwide, in part because of Beats’ high-profile founders, music-industry leaders Dr. Dre and Jimmy Iovine.

But a few dozen exits to the north on Highway 101, there’s plenty of speculation about big changes coming to regionally based companies or big units of companies based elsewhere.

We’ll start with Allergan, an Irvine-based pharmaceutical company best known for its hot-selling Botox products. Nine years ago, the company forked over $3 billion to buy Goleta-based Inamed, a maker of breast implants and a range of devices to deal with obesity and other health problems.

Allergan remains a major employer in Goleta. Recently it has been the subject of a novel takeover buyup between activist investor Bill Ackman and his Pershing Square hedge fund, and, Valeant, a smaller pharma company. After sending some very mixed signals over the past few weeks, on June 3 Ackman called for a formal shareholder vote in August to consider an audacious deal offering nearly $180, or $58.30 in cash and 0.83 of a Valeant share, for each share of Allergan stock.

Will a combined Valeant-Allergan keep the Inamed products in the company fold? Will financial pressures force a restructuring?  Will the bold move succeed? We will have to wait.

Just down Highway 101 from the former Inamed offices, Goleta-based Citrix Online, a unit of Florida-based Citrix Systems, has seen some high-profile turnover in its executive suite.

Elizabeth Cholawski, a veteran executive and relatively rare woman in technology leadership in the region, has departed Citrix for the CEO post at Support.com in the Bay Area. Among Citrix’s best known products are its ubiquitous GoToMeeting and GoToMyPC software offerings.

On May 26, financial publication Barron’s, citing Bank of America/Merrill Lynch research, put Citrix on its list of 10 top takeover targets. Barron’s said the company, which has market cap of about $10 billion but trades at a modest 13 times cash flow, could become an attractive software delivery system for a company looking to “diversify away from slipping hardware sales.”

Finally, there is Thousand Oaks-based Amgen, the world’s biggest biotech company by revenue. When I wrote about the company’s need to keep its financial results in line with expectations or face a possible challenge from an activist, a company spokesperson pointed out that the company remains committed to dividend increases, that its operating profit grew 18 percent year over year and that overhead costs are coming down.

Barron’s advanced the speculation June 3 with an online note from a couple of analysts at Bernstein. I’ll put that one in the highly speculative file.

There’s no doubt that as it rises the merger-acquisition-activist tide will arrive in the region. When you consider that Allergan already is pretty much in play, maybe it already has.

• Contact Henry Dubroff at hdubroff@pacbiztimes.com.

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