Text Version
RSS Feeds
Home Forum Photos Features Newsletter Archive Employment
About US Help Site Map
SEARCH   About US FAQ Site Map Site News
  -Text Version
  -RSS Feeds
  -News Archive
  -Give us feedback
  -Voices of Readers
  -Online community
  -China Biz info
  What's new
Solvay sells drug unit for $6b
+ -
08:49, September 29, 2009

 Related News
 British Petroleum mulls share in China-Kuwait joint refinery project
 Italian consumer confidence reaches highest peak since 2006
 France's top bank to close branches in tax heavens
 OPEC weekly oil prices drop again
 Feature: Ancient Grand Bazaar in Istanbul hit hard by economic crisis
 Comment  Tell A Friend
 Print Format  Save Article
Belgian drugs, chemicals and plastics maker Solvay said yesterday it would sell its drugs unit to US partner Abbott Laboratories for 4.5 billion euros ($6.6 billion) in cash and reinvest in chemicals and plastics.

Abbott had agreed to buy the unit to bolster its flagging prescription drug business by giving it a number of new medicines in late stages of testing, sources familiar with the deal had earlier told Reuters.

"We are building a new refocused group with the financial means to further accelerate sustainable growth," Solvay's board chairman Alois Michielsen said.

The enterprise value of the deal is 5.2 billion euros, including 4.5 billion in cash, additional potential milestone payments of up to 300 million euros between 2011 and 2013 and liabilities of about 400 million euros.

"In anticipation of future market needs, we are ensuring we have the technologies, products, infrastructure and reach," Abbott Chief Executive Miles White said in a statement.

Abbott said the deal will add $0.10 to ongoing earnings per share in 2010, doubling to more than $0.20 by 2012 and increasing thereafter, all before one-time transaction-related items expected to occur in 2010-12.

Abbott said it would fund the deal with available cash.

JP Morgan said in a research note that the 5.2 billion euros price significantly exceeded market expectations of 4 to 4.5 billion euros, although in line with its valuation of 5 billion.

"The lack of cash returns (such as a special dividend) on the back of the deal may be viewed as a disappointment to some investors, but we view this as positive long-term given it emphasizes Solvay management's commitment to investing and growing the core chemicals and plastics businesses."

JP Morgan has a "neutral" rating on the stock. The pharma sale price implies a sum-of-the-parts valuation of Solvay of 82 euros per share.

External growth

Solvay said the proceeds from the deal will be reinvested in external and organic growth in strategic projects in chemicals and plastics with a sharp focus on long-term value creation.

Studies about such reinvestments are ongoing, it added.

"What is important is that we have the cash in-house. What we will aim at is reinvesting in activities securing a sustainable growth," Solvay Chief Executive Christian Jourquin told reporters.

He added that Solvay's drugs unit had provided the firm with low cyclicality, less exposure to energy costs and high-added value and that this would be the criteria that would guide Solvay's reinvestment policy.

Abbott co-markets with development partner Solvay the cholesterol treatments TriLipix and Tricor. It is also working in the US on a combination cholesterol treatment with AstraZeneca using TriLipix as Solvay pursues the development of a combination treatment for Europe and elsewhere.

The deal will bring Solvay's treatments for Parkinson's disease, Meniere's disease (abnormality of the inner ear), vertigo, and irritable bowel syndrome to Abbott's presence in cardiovascular disease, neuroscience and gastroenterology.

The deal also includes Solvay's vaccines business.

Solvay's Dutch cell-based flu vaccine production facility - which can produce both seasonal and pandemic influenza vaccines - was validated earlier this month after a final inspection by Dutch authorities.

Cell-based technology is thought to be more efficient than using chicken eggs and offers greater production scale.

The transaction is expected to be closed in the first quarter of 2010, pending approval by competition authorities.

Source:China Daily

  Your Message:   Most Commented:
Indian media stinks up public opinions
Which country has the most beautiful women?
World's top ten most mysterious and horrible spots
How do India's middle school textbooks portray China?
China denies entering other countries' airspace

|About Peopledaily.com.cn | Advertise on site | Contact us | Site map | Job offer|
Copyright by People's Daily Online, All Rights Reserved