This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Mentor Plots Cosmetic Change

Ironically, Mentor's offer for Medicis makes Medicis' offer for Inamed look even better. In March, the Medicis bid was valued at $2.8 billion, or $75 a share, in cash and stock.

After Allergan entered the fray last week, Medicis' stock fell, and the total value of its deal dropped to $69 a share. Now, thanks to Mentor, the Medicis offer is worth just under $76 a share.

That's still not as good as the Allergan offer for Inamed, which is valued at $3.2 billion, or $84 a share in either cash or stock.

Trading in Allergan and Inamed was relatively calm. Allergan, of Irvine, Calif., was down $1.04, or 1%, to $99.21. Inamed, like Mentor based in Santa Barbara, Calif., was off 16 cents to $83.15.

The Latest Player

Some analysts said the Mentor bid was a nice try, but others say it was a doomed proposal. This was a "dead-on-arrival offer," says Amit Hazan, of SunTrust Robinson Humphrey, in a research note. "We are puzzled by both the structure and the timing. The all-stock offer poorly missed the mark."

Hazan cut his rating on Mentor to neutral from buy. "We are now uncomfortable with this management team's ability to use the ensuing proceeds from selling the urology businesses to drive shareholder value," says Hazan. "Indeed, the Medicis offer is indicative of this management's uncertainty with the direction of the business." Hazan doesn't own shares, and SunTrust doesn't have an investment-banking relationship with Mentor.

John Calcagnini of CIBC World Markets says the Mentor bid made strategic sense, giving it access to Medicis' skin care drugs while Mentor continues working on an experimental drug similar to Allergan's Botox. However, Medicis "is intent on buying Inamed and remaining independent," he says.

Calcagnini, who has a sector outperform rating on Mentor, adds that he "would not rule out the possibility" that another company would make a run at Mentor. He doesn't own shares, and his firm doesn't have an investment-banking relationship with Mentor.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
MRX $0.00 0.00%
AGN $240.22 1.21%
IMDC $0.03 0.00%
AAPL $124.75 0.00%
FB $80.78 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs