Nycomed came up short in the bidding war for Solvay SA’s drug unit in what would have been the largest private equity-backed deal this year. Nonetheless, its offer revealed a striking willingness among banks to provide ample financing for the right target as well as the power strategic buyers wield over buyout firms in the current deal market.
Columbus, Ohio-based Abbott Laboratories announced Sept. 28 that it would buy the Belgian company’s drug unit for €4.5 billion ($6.6 billion), out-bidding Nycomed, which bid somewhere between $5.9 billion to $6.6 billion. Reuters reported on Sept. 25 that Nycomed’s backers were weighing the possibility of sweetening their offer but it was unclear at deadline whether they did so. The company’s private-equity owners include
Had Nycomed succeeded, it would have marked the largest buyout of the year by a good margin, the closest being
It will be interesting to see if Nycomed will turn its attention elsewhere as the pharmaceutical industry continues to consolidate and banks become more comfortable lending. The Solvay unit would have offered Nycomed a group of drugs to complement its heartburn treatment Pantoprazole, as well as cost savings and a greater foothold in emerging markets. The deal would have created a company with about $8.8 billion in sales.
The loss of the Solvay unit must be a heartbreaker for Nycomed considering it seemed poised for a while to be the only serious bidder. Abbott Laboratories in fact reversed its decision in pursuing the unit, having announced in July that it wouldn’t be interested because it already makes a number of fenefibrates, a type of cholesterol-lowering drug that includes TriCor, which is one of Solvay’s top drugs.
The loss of the deal also marks a setback to Nycomed’s plans to scale it up in anticipation of an initial public offering, which is planned for 2011, according to Bloomberg. In August the Zurich-based company spent an undisclosed amount to buy 20 branded generic products from Sanofi-Aventis, a Paris-based pharmaceutical company, and Zentiva N.V., an Amsterdam-based pharmaceutical company. In its largest acquisition, in 2006, Nycomed bought Altana AG’s drug unit for about $6.6 billion.
DLJ Merchant Banking first invested in the company in 2002 as part of a consortium (including