Sunday, August 20, 2017

KKR to Cash in on Arbor Pharmaceuticals


Reuters reported several Chines suitors are pursuing Arbor Pharmaceuticals. 

A potential deal could value Arbor at around $3 billion. New York-based KKR agreed to buy more than a quarter of shares in the company in December 2014, in a deal that valued privately held Arbor at over $1 billion, Reuters reported at the time. 
KKR did add Xenoport in 2016 for $467 million.

Buyout appetite from large pharmaceutical companies and private equity firms has pushed dealmaking in the healthcare sector to record levels this year.
For holding Arbor Pharmaceuticals less than three years KKR could make 200% gross profit.  That does not include any PEU management fees, dividend bleeding or deal fees.   I'm not sure my health care coverage is 200% worse than 2014 but it's darned close. 

A Chinese purchase should make U.S. consumers nervous, especially those who recall the deadly heparin outbreak in late 2007 and early 2008.  It came from toxic Chinese drug ingredients.

One Arbor employee advised management in June on Glassdoor:

The products ARE NOT GOOD. The supply chain is WORSE. The amount customers pay out of pocket IS HORRIFIC.
KKR will sell Arbor Pharmaceuticals but is buying WebMD for $2.8 billion.  As people can longer afford health they search the internet for information.  I'm not sure how PEU owned WebMD will change, but it won't be for the better.