Monday, April 16, 2007

Paperstand (SLM, GOOG, MRK, HNR)

The WSJ reports that Sallie Mae (SLM) agreed to be sold to two private-investment funds and banks JP Morgan and Bank of America for $25bn, putting the embattled co into private hands at a time of intense political scrutiny of the student-lending industry. JC Flowers and Friedman Fleischer & Lowe plan to take a 50.2% ownership in the newly private firm, with JP Morgan and BofA each taking 24.9% stakes in the co. The buyout group plans to pay $60 per share, nearly a 50% premium to where its shares traded on Thu, before word leaked out of a possible transaction.

According to the WSJ, Google (GOOG) plans to begin selling advertising on more than 675 radio stations owned by Clear Channel Comm. (CCU), in a move designed to add scale to the co's offline ad-brokering efforts and boost Clear Channel's rev.

The WSJ discusses Merck’s (MRK) new vaccine against cervical cancer, Gardasil. The co lobbied dozens of states to make the vaccine mandatory for 11 and 12 year-old girls. The campaign scored some big victories. The CDC declared all women age 11-26 should get the vaccine. But behind the scenes, Gardasil has been dogged by uncertainty about how effective it really is. The FDA didn't ask its panel of experts advising on Gardasil to rule on whether the vaccine specifically prevented the cancer itself. In clinical trials, 361 of 8,817 women who received at least one shot of Gardasil went on to develop precancerous lesions on their cervixes within 3 years of vaccination, just 14% fewer than in a placebo control group. Scott Emerson, a professor of biostatistics at the University of Washington who sat on the FDA advisory committee, says he's not persuaded the vaccine is worth the billions of dollars likely to be spent on it in coming years. "I do believe that Gardasil protects against HPV 16 and 18, but the effect it will have on cervical-cancer rates in this country is another question entirely," says Dr. Emerson. Safety is another issue. Merck tested the vaccine in only a few hundred 11 and 12 year-old girls. Some doctors consider that number too small to declare the vaccine safe. In its approval letter, the FDA ordered Merck to follow "a sufficient number of children 11-12 years of age" in a large postmarketing study to further establish the vaccine's safety. That study won't be completed until ‘09.

Barron’s Online “Inside Scoop” section reprots that value investor Mohnish Pabrai's gushing purchases of Harvest Natural Resources (HNR) indicate that the stalemate caused by Venezuela's move to partially nationalize E&P co’s may be near completion. Pabrai, of Pabrai Investment Funds, has spent more than $12.3m to purchase 1.3m shares of Harvest. Ben Silverman, of, says that Harvest's prospects are riding on the co gaining final approval from the Venezuelan govt. But considering that Harvest is Pabrai's sole energy play in a concentrated portfolio, Silverman says the value investor "sees the forest through the trees [and] his continued investment here suggests that he has a lot of faith in the name."

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