LONDON (MarketWatch) — Belgium’s UCB on Monday said it agreed to pay $5.6 billion for Germany’s Schwarz Pharma, the third multibillion-dollar takeover in the European pharmaceutical industry in the past five days.
UCB (000373953) said it’s paying 4.4 billion euros in cash and shares, representing a 20% premium to Friday’s close, for Schwarz Pharma (722190).
The deal follows proposals by Germany’s Merck KGaA (659990) to buy Switzerland’s Serono
for $13.3 billion, and Denmark’s Nycomed to buy the pharmaceutical operations of Germany’s Altana
for $5.8 billion.
Those deals had driven up Schwarz Pharma’s price, as UCB is offering 28% more than the German company’s value before the Serono and Altana deals.
Roch Doliveux, chief executive of UCB, denied that the recent deals prompted the companies to act.
“I think the recent consolidation may have started a few weeks ago, whereas we have certainly known each for quite a while and have been discussing for many, many months,” he said.
UCB is offering 50 euros cash plus 0.8735 share for each Schwarz Pharma share. The proposal values Schwarz Pharma at 91.1 euros based on Friday’s closing prices.
All the shares UCB is paying to Schwarz Pharma will come from a capital increase.
The controlling Schwarz family has pledged to vote its 60% holding in support of the deal and to hold UCB shares through June 2010.
Schwarz Pharma’s shares jumped 19.9% to 90.68 euros. Shares of UCB, after initial losses, rose 2% to 48 euros. Read Europe markets.
The combined companies would have annual revenue of more than 3.3 billion euros, global leadership in neurology and a more diversified product portfolio, the companies said.
Credit Suisse analyst Ravi Mehrortra said the neurology expertise of UCB’s sales force could bolster sales of Schwarz Pharma’s lacosamid, currently in development as a therapy against epilepsy and naturopathic pain.
“This could turn lacosamide from a product with peaks sales of around 700 million euros to a $1.5 billion product, in our opinion,” he said.
Part of Schwarz Pharma’s portfolio also includes a license to Pfizer Inc.
to make a bladder-control drug.
The companies expect more than 300 million euros a year in synergies after three years, and they anticipate the deal will lift adjusted earnings in the second year.
UCB will still be headquartered in Brussels, while the Schwarz Pharma name will be used to headquarter the primary-care business.
Schwarz will still be operated from Monheim, Germany.
Braveheart Financial Services and Lazard advised UCB. Rothschild advised Schwarz Pharma.
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