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Mepha Pharma, the Switzerland-based pharmaceutical company, is expected to receive first round bids for the company on 23 October, two sources familiar with the situation told Pharmawire.
In August, Mepha, owned by Germany’s Merckle family, announced it had hired investment bank Rothschild to examine all options for the firm, including a sale. As of late, it has been speculated that Mepha has retracted its sale strategy. However, sources have confirmed to this news service that the auction is still on track, with a foray of suitors competing.
Mepha declined to comment for this article.
A first source said potential bidders had been reassured by Ludwig Merckle through letter documentation of his commitment to selling the company. An industry banker told this news service that various parties were questioning the validity of Mepha’s intent to sell.
Still, the first source said it would take a few days for people to settle down after what he referred to as ”confusion” over whether the process would be pulled. One or two bidders could have been offered a grace period to place offers, he noted.
”This is completely going ahead and there shouldn’t be any speculation about that,” the source added.
A second source noted that the interested suitors so far include Teva Pharmaceutical, STADA Arzneimittel. Pfizer might also be interested. Private equity is taking a hard look. GlaxoSmithKline, Roche, Mylan and Novartis are not vying for Mepha.
Mepha has become a regional sweet spot due to its strong presence in Switzerland, its emerging market advantage, reputable branded and OTC (over-the-counter) businesses, he added.
According to a Mepha press release, the company exports to such countries as the Baltic States, Poland, Portugal, to the Middle East, to West and East-Africa and to Southern and Central America.
The first source would not disclose the type of valuation Mepha is seeking, but said the sale price that has been circulating in the press of just under USD 500m is incorrect. He compared the Mepha valuation to that of generics firm, Arrow Group, which sold to Watson Pharmaceuticals for USD 1.75bn in June.
As for bidders, the first source said that other public companies would be interested in Mepha, including non-generic suitors who see the advantages of Mepha’s branded products, other than being viewed as a pure generics target. Mepha’s marketing strategy ”on a value-added basis,” is a business model that appeals to specialty pharmaceutical firms, he said.
He did not comment on specific possible specialty pharma bidders, but said Genzyme did not make sense. However, there is a US-specialty company equivalent to Shire that could bid for Mepha, he said. He would not confirm whether it could be Forest Laboratories. Investors have also tagged Cephalon as a company potentially seeking acquisition opportunities, but have not cited Mepha in their discussions.
The industry banker said Sanofi-Aventis, which has previously been mentioned as a leading suitor, may still be in the process, but its interest could be waning.
Both the first and second source said Mepha had caught the eye of private equity firms. The second source cautioned that private equity would be considering that Mepha would have to be built into a substantially bigger entity, even though it provides in some cases a first toe into generics.
Advent International, Texas Pacific Group, EQT, Apax Partners and potentially Kohlberg Kravis & Roberts have been indicated by this news service as active private equity firms scouting generics buys.
The first source acknowledged that sponsors who approached Mepha have been given guidance to present a clear strategic angle for their goals in bidding for the target, as there is a belief that an LBO financing package may be sufficiently less than offers from corporate bidders.
Mepha had sales of CHF 379m (USD 374m) last year.
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