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MORGAN STANLEY’s 14 HEALTH CARE MERGERS AND ACQUISITIONS

Executive Summary

MORGAN STANLEY's 14 HEALTH CARE MERGERS AND ACQUISITIONS made it the top investment banker in the field in 1989, when it handled transactions with an aggregate value of $28.7 bil. Morgan Stanley advised on five pharmaceutical deals: Squibb's $12.4 bil. merger with Bristol-Myers; Fujisawa's $1.1 bil. acquisition of Lyphomed; the $6.2 bil. Marion Labs-Merrell Dow transaction; American Cyanamid's $225 mil. acquisition of the vaccine maker Praxis; and the $3.3 bil. deal by which American Home Products finally purchased A.H. Robins once the Dalkon Shield was settled. Of the 14 Morgan Stanley transactions completed in 1989, one was announced in 1987, five in 1988, and the remaining eight in 1989. The investment banker last year also announced three other deals, but they were not completed by Dec. 31. By comparison, in the less volatile merger and acquisition atmosphere of the first half of 1990, Morgan Stanley announced advisory roles in two health care transactions: Lilly's March 30 definitive agreement to acquire for an undisclosed price Pacific Biotech, a developer of immunodiagnostics products; and Pharos AB's May 15 agreement to acquire Ciba-Geigy's laser subsidiary Spectra-Physics for $325 mil. The investment firm is now concentrating more on financings than mergers and acquisitions. Among Morgan Stanley's financings this year is a $28 mil. common stock offering for Cytogen and a$115 mil. convertible debt offering for Chiron. A tabulation by Windhover's Health Care Strategist of last year's financial activity in the field finds that Morgan Stanley and Goldman Sachs were the most active investment banks in health care; by Windhover's count of deals announced last year, both Morgan Stanley and Goldman Sachs advised in 11 acquisitions and/or divestitures. For its part, Goldman Sachs was advisor to Bristol-Myers in the Squibb deal, and to SmithKline Beckman in its merger with Beecham. First Boston also had a big year, advising in eight transactions, including the Bayer AG subsidiary Miles Laboratories in its acquisition of Cooper Technicon and Lyphomed in its merger with Fujisawa. The Health Care Strategist lists 252 completed deals in the entire medical industry last year as compared to 338 in 1988. However, dollar volume nearly tripled to $43.7 bil. in 1989, from $16.6 bil. the previous year. In the pharmaceutical industry alone, dollar volume from 51 agreements was $31.8 bil. in 1989, compared to $9.5 bil. from 56 deals consummated in 1988, the annual publication reports. In the first six months of 1990, 402 acquisitions and joint ventures were announced in the health care field; 131 of these involved pharmaceutical firms. Confirmed deals have averaged $466 mil. in the pharmaceutical industry and $82 mil. in the health care field as a whole, the Strategist reports. The 1990 edition of the Health Care Strategist is available through "F-D-C Reports, Inc."

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