Sweden’s Meda has forged a deal to buy its Italian rival Rottapharm for 21.2bn kroner ($3.1bn), after fending off an advance from US generics giant Mylan earlier this year.
Meda said this morning the deal would expand its portfolio of specialty prescription drugs and consumer healthcare products, while also helping it to expand in emerging markets.
The Swedish firm said it will pay 15.3bn kroner in cash for Rottapharm, along with 30m Meda shares and an additional payment due in early 2017 of 2.6bn kroner.
Rottapharm makes osteoarthritis treatment Arthryl/Dona (glucosamine sulfate) and a range of generic cardiovascular, gastrointestinal, respiratory and gynaecological drugs. The company also has a number of personal care products, such as children’s sunscreen Babygella, and dietary supplements.
Meda chief executive Jörg-Thomas Dierks said that combining with Rottapharm would create a leading European specialty pharma group with more than 18bn kroner in sales and cost-saving opportunities of around 900m kroner by 2016.
The transaction will also boost Meda’s current turnover in emerging markets by 50 per cent to 3bn kroner, thanks to Rottapharm’s expanding activities in areas such as Southeast Asia which complement Meda’s own operations in countries such as China and Brazil.
News of the takeover comes just days after Rottapharm was forced to abandon an initial public offering (IPO) that had hoped to raise up to €540m after failing to muster enough buyers at its target price.
Rottapharm’s consumer healthcare portfolio accounts for 75 per cent of its revenues and was a particular driver for the deal as the portfolio offers good margins, is not reimbursed so offers free pricing and suffers from only limited generic competition, said Dierks.
The combined company will make about 60 per cent of sales from prescription medicines and 40 per cent from over-the-counter (OTC) drugs and personal healthcare products.
Meda firmly rejected a bid from Mylan in April and has been the subject of perennial takeover speculation – with India’s Sun Pharma and Canada’s Valeant both rumoured to have made overtures to the company in recent years.
The Swedish firm has insisted of late that it is far more interested in making its own acquisitions rather than being absorbed by another company and indicated in May that it wanted to double in size within two years.
At the time, Dierks told investors on a conference call that the current climate in pharma means companies must “eat or be eaten”.
Meda has been protected from hostile takeover activity in part by the large block of its shares (around 23 per cent) that is held by the billionaire Swedish Olsson family.