Monday, September 18, 2000
Chase Manhattan's $34 billion acquisition of J.P. Morgan will
combine the bio banking and research stables of the former Hambrecht & Quist
(now Chase H&Q) with J.P. Morgan. While the eventual strength of the combined
health care franchise will play out over the coming months, the two banks have
posted some impressive IPO underwriting activity this year. Combined, the banks
have been involved in 21 IPOs that have raised more than $2 billion - 36 percent
of the $6.15 billion raised in global IPOs this year, and a 73 percent of the
$4.47 billion raised in U.S. IPOs. "The combination would create the biggest
provider of equity, debt and financial advisory services to the biotech industry,"
said Chase H&Q banker Vivek Jain.
Chase H&Q has been carrying the bulk of the load, as it
has been involved in 18 deals compared with J.P. Morgan's five. Two deals -
Large Scale Biology (LSBC) and Paradigm (PDGM) - had each bank on the syndicate.
While Chase H&Q is outselling J.P. Morgan more than 3-to-1
on the deal side, J.P. Morgan typically has been the lead banker when it gets
involved: serving as the lead manager on four deals. Chase H&Q, meanwhile,
has served as lead or co-lead on five deals (four leads, one co-lead) (see "Deal
Those deals have raised $544.5 million in total, giving J.P.
Morgan an average deal take of $108.9 million. Chase H&Q's 18 deals have
raised a total of $1.6 billion, or $91 million on average.
While who will lead the health care efforts has yet to be determined,
Chase H&Q appears to have a leg up because it's purchasing J.P. Morgan and
because of its size. Both banks have had some turnover in recent months. Dennis
Purcell left Chase H&Q in February to join Perseus-Soros BioPharmaceutical
Fund, and five months later Steve Elms left Chase H&Q to join Purcell. In
June, David Low left J.P. Morgan to join (ironically) Chase H&Q as managing
director of health care banking. Deepa Pakianathan and junior banker Ted Kalen
head up J.P. Morgan's biotech banking.
Amgen (AMGN) dipped $4.50 to $67.438 on 21.6 million shares
on Thursday after management told the Bear, Stearns health care conference that
the company would be receptive to making an acquisition that would be modestly
dilutive to near-term earnings. Scuttlebutt is that AMGN is looking at companies
with late-stage cancer antibodies. Bloomberg on Thursday mentioned ImClone (IMCL)
as a candidate. IMCL has several Phase II and Phase III trials ongoing with
IMC-C225 monoclonal antibody against the epidermal growth factor receptor in
a range of cancers. Both IMCL and AMGN declined to comment. AMGN got back $0.188
to $67.625 on Friday, putting it down $7.313 (10 percent) on the week. IMCL
jumped $14.125 (15 percent) on the week to $108.875.