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Maven: Double Vision on Mylan Deal

Opposing views of its Merck KgA buy somehow miss that this flip was a flop.

Considering the revivalist fervor the business media generally employ when writing of merger deals, The Business Press Maven was gratified to see a few stories covering how Mylan's (MYL) - Get Mylan N.V. (MYL) Report purchase of Merck KGaA's generic drug business came at too dear a price.

But even when raising an eyebrow at the valuation of the deal, problems arise. I want to look at two different articles.

One, from

Business Week

, questioned the price, but outside of that gave no reason why the deal might not work. And if there is no reason why a deal won't work, well, maybe the price wasn't so bad. Right? Wrong? I dunno. The article earned a mark from The Business Press Maven of "incomplete."

The other story, from

The Wall Street Journal

, also questioned the price. But it also managed to make abundantly clear why the price was too high and what about it won't work. This article earns an A.

Here is the headline of the

Business Week

piece: "Mylan's Pricey Generic Buy." The lead talks about "the rich price" of $6.7 billion. From there, though, we are off to the land of tea and crumpets: The easy, good prospects of the merger. Mylan will become a top-tier global generic player, adding to its business in Europe, thus decreasing dependence on the U.S.

The article even saw fit to include the most pro-forma-press-release hunk of nonsense in existence. A quote from Robert J. Coury, Mylan's CEO, is lifted from the release, saying (you guessed it), "the fit between our two companies is truly outstanding."

With insights like that making their way right from press release to article, it's hard to make a case that computers -- or laboratory monkeys, for that matter -- can't write stories like this. Oy. Was I really generous enough to have given this thing an "incomplete"? Change that to an F.

Compare that with this nice piece of work from

The Wall Street Journal

. The headline is "Mylan's Bet Could Backfire." The

Journal

makes the somewhat audacious claim that "there's little strategically wrong with the purchase. But Mylan is paying far too much."

If the deal is not wrong strategically, can they really be paying too much? Do tell. The

Journal

did.

Remember that limited geographic overlap

Business Week

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was crowing about? The

Journal

notes that it means little chance for cost savings. Moreover, the deal is being shoved down investors' throats. Remember the CEO's press-release platitude that

Business Week

went with? The

Journal

doesn't touch it. Its first mention of Coury is hardly in a "don't worry, be happy" vein.

"Mylan boss Robert Coury's credibility still suffers from the company's bungled King

Pharmaceuticals deal

a $3.8 billion bid they were forced by shareholders, including Carl Icahn, to abandon, and its shares haven't budged in four years. And now it has suspended its dividend to conserve capital.

"But the real salt in investors' wounds is that the Merck deal makes Mylan a less attractive buyout target."

In other words, the companies complement each other so well that there are few cost savings to be had. And the CEO took an easy out for shareholders off the table. So while the deal was a flip, it was also a flop.

Investors' Heaven?

I heard something on

CNBC

recently that I don't want to dignify with too much space and focus, while at the same time putting the larger issue it represents out of our collective misery -- once and for all.

On Wednesday morning, someone was prattling on about oil stocks. He thought they were a buy "with peak driving season coming up." I do not recall hearing him challenged, though, to be fair, The Business Press Maven had just flung himself on the floor and was busy tearing at his hair.

Never has there been a more amateurish thought about investing mouthed by more purported professionals -- and left unchallenged by the business media.

What a foolproof strategy. Buy oil stocks before the summer driving season. Buy notebook and pen stocks before "back to school" season. Buy retailers before Christmas, chocolate concerns before Valentine's Day and matzo-makers in the lead-up to Passover.

If only investing were that easy. But unless you can't tell a stock from a blonde, you have to have enough common sense and experience in the market to know that if investing were this easy, everyone -- The Business Press Maven included -- would be a billionaire long since retired and able to pursue a favorite hobby full time (in my case, euthanizing butterflies).

The stocks of companies simply do not move up automatically during their busy season. But I would love to live in a world where this happened. It's called Investor's Heaven. If you hear someone assuming it is like that in our more earthly surroundings, you are well advised to cover your ears. Such talk will euthanize your portfolio.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children. Fuchs appreciates your feedback;

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