Is Amylin Already At Full M&A Value Even Before It Is Announced? (AMLN, AZN, SNY, MRK, BMY, PFE)

Amylin Pharmaceuticals Inc. (NASDAQ: AMLN) is back in the rumor mill as far as a buyout, but this time the price appears to be more finite.  We have heard enough names around this diabetes treatment maker’s suitors in recent months that it is conceivable that any large drug maker could be in the running.

The latest figures put the range at $25 to $29 per share.  We have in the past heard of price targets as high as $30.00 or even higher under the best of scenarios.  We have also heard prices in the high-teens as a starter and the low-$20s more recently for a floor.  The most resent range offered by Bloomberg using people with knowledge of the process shows the second round generating $25.00 to $29.00 per share.

The list of the big pharmaceutical names in the current bidding group are said to be AstraZeneca PLC (NYSE: AZN) Sanofi (NYSE: SNY), Merck & Co. (NYSE: MRK) and Bristol- Myers Squibb Co. (NYSE: BMY).  The latest is that Pfizer Inc. (NYSE: PFE) was interested in the base case but has effectively dropped out of the process.

Amylin would be valued at roughly $4.1 billion to $4.7 billion based upon the indicated share price range.  Where this gets interesting is that Amylin is supposed to have sales of $679.1 million in revenue in 2012 and $877.8 million in 2013.  The problem is that the company is still expected to lose money with -$1.78 EPS in 2012 and -$1.07 EPS in 2013.

Amylin could fetch more than the $25 to $29 range if it was profitable.  The problem is that it is not profitable and is not expected to be profitable for the near-future.

Shares are trading higher by only about 2.5% at $27.30 and the stock has recently traded as high as $28.45 around past buyout rumors.  After closing at $26.63 on Monday it sure appears as though most M&A speculators and investors see Amylin already trading close to fair value.  To prove a point, Thomson Reuters has a consensus ‘stand alone’ value at $19.84 for its consensus analyst target.

JON C. OGG