Medicis to acquire Ascent Pediatrics for 13.33 times revenue

The Deal: Medicis Pharmaceutical Corp. has agreed to purchase Ascent Pediatrics Inc. for $60 million. The acquisition is a move by Medicis to enter into the market for children's drugs.

Discussion: Ascent Pediatrics uses taste-making technology to develop formulations of already-approved prescription

drugs for children that reduce side effects and dosing frequency and are easier to administer. Products include Orapred syrup for respiratory problems, Primsol Trimethoprim solution antibiotic for ear infections and Pediamist, an over-the-counter nasal saline spray with a metering device. Products in development include treatments for asthma and inflammation.

Medicis markets prescription skin products such as Dynacin and Triaz acne medications, head lice treatment Ovide, skin discoloration and hyperpigmentation treatments Lustra and Lustra-AF, and antifungal and corticosteroid products acquired from what is now Aventis. Medicis' customers are primarily wholesale distributors like Cardinal Health and McKesson. Although the company continues to sell

Esoterica over-the-counter skin creams and moisturizers, it is focused primarily on expanding its lucrative prescription business. tomers. However, Gateway will be competing against established firms in the computer services market. Companies such as IBM and Dell Computer already have a strong hold of the risky and difficult market. Since the company has such a reliance on PC sales, and given the nature of its services competitors, Standard & Poor's Corp. has reduced Gateway's bond rating to Junk its stock is maintaining its downward course. Tony DuBois, a computer analyst for consultant ARS Research stated that, "Better leveraging of the stores is a sound idea, but the services being offered are not that innovative."

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TRANSACTION VALUES

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OPERATING DATA

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OPERATING DATA

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BALANCE SHEET ($mil.)

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BALANCE SHEET ($mil.)

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Additional Transactions

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PUBLIC COMPANY TRANSACTIONS

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Valuations of Recent Initial Public Offerings

Gateway posts cash of nearly $1 billion and virtually zero debt. This will most likely keep the company from going under, but will also keep it from being an attractive acquisition. A precarious position that just may make Gateway the permanent small man on a ruthless PC campus.

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Market Summary

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