M.An investor must not be overwhelmed either. A billion-dollar takeover is all well and good – but when the details behind the big deal are overly complicated, the shareholders like to run away. This is what happened this week at the Bavarian M-Dax company Morphosys, which is preparing to take over its American competitor Constellation Pharmaceuticals for $ 1.7 billion. But not just from the postage, but through a cash injection divided into several tranches from the American pharmaceutical investor Royalty Pharma, who in return receives the license rights for some Morphosys products. The price of the biotechnology company from the Munich suburbs fell by a good 15 percent, to its lowest level since September 2017.
Analyst James Gordon from the American bank JP Morgan was the first to digest the surprise coup and was quite optimistic shortly after the announcement. Although the business is likely to dilute profits in the short term, all in all he sees “significant long-term value appreciation potential”. In the meantime, colleagues from Deutsche Bank and Commerzbank have approved the project as largely positive and, with their price targets of 116 and 150 euros, apparently trust Morphosys to make a significant price jump. On Friday, the rate rose at times by just under 4 percent to more than 67 euros.
Vonovia course recovers quickly
The boss of the major landlord Vonovia only learned last week that the shareholders are not always as enthusiastic as the company bosses when they get engaged to their corporations. Here, too, the wedding registration with Deutsche Wohnen initially led to a steep price slide of more than 5 percent, while the bride’s share, i.e. Deutsche Wohnen, shot up by 15 percent. In the meantime, Vonovia shareholders have apparently also got a taste for the takeover – at the beginning of this week, the price jumped the level from before the announcement.
Of course, the shareholders of the Bayer Group also know that takeovers are by no means a sure-fire success and that not every common future shines as golden as the top managers imagined. Since the purchase of the agrochemical manufacturer Monsanto with its mega legal risk glyphosate as a dowry, the value of the share has halved. It is therefore understandable that many investors initially react with caution when the board of directors suddenly presents them with a billion-dollar deal.