Diabetic Investor is beginning to wonder if Panasonic/KKR is having second thoughts about acquiring Bayer’s diabetes unit. It has been widely speculated that Panasonic/KKR was all set to buy this unit for $1 to $2 billion. Yet in a move that could only happen in the wacky world of diabetes Bayer reorganized the unit downsizing an already downsized unit. As we noted once we learned of the reorg why in the world would Bayer reorg a unit which is about to be sold, why not let the new owners put their stamp on the unit. Several sources noted that as nutty as this move seemed the buyout was still on.
Well here it is St. Patrick’s Day weekend in that beautiful city of broad shoulders, hog butcher to the world with a soon to be green river and still no official announcement.
Now we hate to bring up the past but Bayer has been down this road before, not once but twice. Yes at one time it looked like they had found a buyer for the unit in Sanofi (NYSE:SNY). Yet as per Sanofi, and remember this was before they turned into a soap opera, got cold feet and walked away, only to come back and walk away yet again. Could it be that history is repeating itself and its Panasonic/KKR who is now getting cold feet?
Keep in mind that the last time this unit was for sale and before Sanofi seemed to be the buyer, Panasonic/KKR was also interested yet backed away when they learned what Sanofi was offering. Back then Diabetic Investor speculated that Bayer overplayed their hand as they failed to realize that when it comes to Sanofi and anything diabetes related they couldn’t hit water if they fell out of an ocean liner in the middle of the ocean. That it would have been better to sell the unit to Panasonic/KKR as at least they could close a deal, or at least we thought they could.
Now it is possible we all wrong here and Panasonic/KKR really wants to be in the glucose monitoring market, that they really are perfectly happy to pay a billion bucks or so and then invest even more money to turn this unit around. That yes they want to enter a market that is imploding. That yes they really are that stupid.
Yet as this drags on perhaps the opposite is true, that Panasonic/KKR have come to their senses and realized that if they are stupid enough to enter the BGM market better to buy Roche’s or Abbott’s (NYSE:ABT) diabetes device units. While neither unit is doing that great they are in much shape than Bayer’s unit, we know that isn’t saying much but it is true. Perhaps even better they have recovered from their drunken stupor and decided if they are going to blow a billion bucks or so better to own an NBA franchise.
Diabetic Investor has always wondered what sane company would actually buy any BGM company after doing their due diligence. Why would anyone want to be in a market that is being flushed down the toilet? Yes we know that diabetes is growing at epidemic rates but that alone cannot be the reason.
Frankly we think Bayer should go to Abbott CEO Miles White to get a deal done as Mr. White has a long and distinguished history for buying and then running into the ground not one but two BGM companies. At least if Abbott bought Bayer’s unit they wouldn’t have to run it into the ground as Bayer has already done that.
Perhaps Bayer is still in a state of shock over losing Brandicourt to Sanofi. Or better still they are holding out hope that now that Brandicourt is CEO of the three ring circus he just might buy a unit he once ran. Listen given how Afrezza is doing buying the unit would at least temporarily divert attention away from another Sanofi diabetes failure. Keep in mind this is the wacky world of diabetes where can and usually does no matter how crazy it seems.
Like we stated before we could be all wrong and Panasonic/KKR is taking their time before pulling the trigger. Yet we can’t help but believe that the good people at Bayer are getting a little nervous. They have seen this movie before and are beginning to worry that the remake will have the same ending as the original. That they will be left standing at the alter yet again.
Well we have some free advice for the folks at Bayer, enjoy St. Patty’s day. Go out drink some green beer, have some corned beef and cabbage and throw in a few shots of Irish whiskey. Just remember the motto of many Chicagoans this weekend- let’s have a great time but no arrests or injuries.