Abbott to buy Solvay unit for $6.6 billion: sources
U.S. drugmaker Abbott Laboratories plans to buy Solvay SA’s pharmaceuticals unit for $6.6 billion (4.5 billion euros), two sources familiar with the situation said on Sunday, with an announcement expected on Monday.
The all-cash acquisition, which would be Abbott’s third significant deal this month and fifth this year, aims to bolster the healthcare company’s flagging prescription drug business by giving it a number of new medicines in late-stages of testing, including treatments for Parkinson’s disease and other neurological conditions.
Buying Brussels-based Solvay’s drugs unit would be Abbott’s second-biggest deal ever, just behind its $6.9 billion deal in 2000 to buy Knoll Pharmaceuticals. The deal also gives Abbott an entrance into the fast-growing business of vaccines.
“Abbott has no vaccines and this is a growing global market, so this is definitely an element that is attracting Abbott,” said one of the sources, noting that Solvay’s relatively small vaccines business is focused on influenza.
Solvay spokesman Erik De Leye declined to comment on a possible deal but said the company would issue a statement and hold a press conference on Monday to discuss the outcome of a recent “strategic review.”
A spokesman for Abbott, based in a suburb of Chicago, said the company “can not comment on rumors.”
The deal, which is seen closing in early 2010, would also broaden Abbott’s current presence in emerging markets, a mushrooming focus for healthcare companies that can no longer count on sizzling revenue growth from the mature U.S. market.
In addition to the 4.5 billion euros, Solvay could receive as much as another 300 million euros ($441.3 million) in milestone payments between 2011 and 2013, one source said. Including milestone payments and liabilities, the deal is worth $7.6 billion (5.2 billion euros), the other source said.
Abbott and Solvay already co-market cholesterol treatments Tricor and TriLipix, which control blood fats called triglycerides. Abbott reported second-quarter combined sales of $336 million for the products.
Abbott’s profit fell in the second quarter, as generic competition for its Depakote anti-seizure drug overshadowed demand for its $5 billion a year Humira arthritis drug and its Xience heart stent. Pharmaceutical sales fell 4.3 percent to $3.95 billion, in contrast to a good showing for its nutritionals products and its heart devices including Xience.
“If consummated, this deal would lower Abbott’s dependence on its lead-drug Humira,” Wells Fargo analyst Larry Biegelsen said last week.
Biegelson said Abbott would gain nine Solvay products now in late-stage trials. But the analyst cited concerns that Teva Pharmaceutical Industries Ltd could launch generic forms of Tricor by October 2010, although an ongoing patent dispute between Teva and Abbott may not have been resolved by then.
Abbott, which has annual pharmaceutical sales of about $17 billion, would take ownership of Solvay drugs, now capturing about $3.8 billion a year.
DEAL-MAKING SPREE
Abbott has said it aims to pursue small and mid-sized deals to further diversify itself and broaden its global reach.
Filed under: marketing by Wolf