UCB to buy Germany's Schwarz Pharma AG

25th September 2006, Comments 0 comments

25 September 2006, FRANKFURT - Consolidation in Europe's pharmaceutical industry gathered pace on Monday when Belgium-based UCB SA announced it had agreed to pay 4.4 billion euros (5.6 billion dollars) for Germany's Schwarz Pharma AG. The UCB takeover follows a series of takeovers and mergers among Europe's mid-sized pharma groups in the last week as the cost of developing new drugs along with intense competition from the global drug giants drives a shakeout in the industry. Schwarz Pharma's shares surged

25 September 2006

FRANKFURT - Consolidation in Europe's pharmaceutical industry gathered pace on Monday when Belgium-based UCB SA announced it had agreed to pay 4.4 billion euros (5.6 billion dollars) for Germany's Schwarz Pharma AG.

The UCB takeover follows a series of takeovers and mergers among Europe's mid-sized pharma groups in the last week as the cost of developing new drugs along with intense competition from the global drug giants drives a shakeout in the industry.

Schwarz Pharma's shares surged by 17.9 per cent to 89.15 euros following the UCB takeover announcement.

The new merged UCB-Schwarz Pharma company will have combined revenues of 3.3 billion euros along with a research and development budget of 770 million euros.

The takeover, which UCB expects to complete by the end of the year, is predicted to generate synergies of 300 million euros a year after three years. The new company will be based in Brussels.

"The enlarged UCB would be a more attractive partner for licensing deals and R&D collaboration than either Schwarz Pharma or UCB alone," UCB said in a statement announcing the deal.

Analysts reacted positively to the Schwarz Pharma takeover. "After the rumours of the last few days the takeover did not come as a surprise," said Oliver Opgen Rhein from the investment house HSBC Trinkaus & Burkhardt.

Indeed, the build-up to Monday's announcement by UCB had been accompanied by speculation that Schwarz Pharma might fall victim to takeover from a bigger rival, including US giant Pfizer Inc.

Last week Germany's Merck KGaA said it was buying Switzerland's Serono SA for 16.6 billion Swiss francs (13.4 billion dollars).

This followed Merck's failure to acquire Berlin-based Schering AG in a hostile takeover battle earlier this year. Eventually, Schering agreed to a 17 billion euros tie-up with German drugmaker Bayer AG.

Germany's Altana AG last week signed off on a 4.5 billion euros deal to sell its drug business to Danish pharma group Nycomed Holding AS.

The series of moves in the pharma business has also again helped to turn the spotlight on the family control of several leading German companies.

While the Schwarz family has a 60 per cent stake in Schwarz Pharma, Altana is controlled by the Quandt family, who have a key stake in luxury German carmaker BMW AG.

Under the deal with UCB, Schwarz's shareholders are to receive 50 euros a share in cash and 0.8735 of one new ordinary share in UCB per Schwarz Pharma share.

DPA

Subject: German news

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