Sanofi moves on Solvay's pharma division

Release Date: 2009-04-02

The drugmaker has approached big shareholders of the Belgian company about its pharmaceuticals business but the offer, which values the whole group at €7.2bn, has been rejected

Sanofi-Aventis, one of the world’s largest drugmakers, has approached big shareholders of Belgium’s Solvay about buying its pharmaceuticals division, thought to be worth €5bn ($6.6bn).

Sanofi last month approached Solvac, the family-owned holding vehicle that controls 30 per cent of Solvay, according to people familiar with the situation.

Solvac, however, rejected the offer, which in effect valued the whole Solvay group at €7.2bn, or €85 a share. It is thought Sanofi is interested only in the pharma business, which generated about half of the group’s operating profits last year.

Solvac believes the company is worth in excess of €100 per share.

Solvay on Wednesday released a statement in response to market rumours which confirmed the company was “proceeding with an analysis of various options for its pharmaceutical activities”.

“Conducting this analysis involves various contacts and discussions with third parties. At this stage, this does not involve any other decision in this respect,” it said.

Solvay has been consulting Citigroup and Rothschild on options for the pharma business.

One possibility could be selling the division to Takeda Pharmaceutical, Japan’s largest drugmaker.

Solvay and Sanofi declined to comment, while a spokesman for Solvac was unavailable.

Solvay boasts a rich pipeline of drugs in late-stage development at a time when many big operators in the pharmaceuticals sector face patent expiry on some of their most cash-generative treatments.

This makes Solvay an attractive target for a larger peer such as Sanofi. The French company’s new chief executive, Chris Viehbacher, has made it clear since his arrival earlier this year that he aims to expand the company through acquisitions.

However, Mr Viehbacher has previously said his favoured option would be to shift Sanofi from “a [European Union]/US-centric pharma company to a global healthcare company”.

Solvay has 10 drugs in phase three clinical trials – the most notable of which include the Parkinson’s disease treatment Duodopa and the flu vaccine Influvac.

Solvay’s pharma business is performing strongly compared with the group’s chemical and plastics operations. The pharma business derives just under half of its sales from Europe and contributed a quarter of the company’s revenues of €9.5bn last year.

Solvay reported a 49 per cent drop in pre-tax profits in 2008.

Solvay shares rose 9 per cent on Wednesday to €57.50. They have gained 36 per cent over the past two weeks.

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