Bayer of Germany has launched a bid to take control of Algeta in a deal valuing the Norwegian maker of injectable radioactive cancer treatments at $2.4bn.

Algeta, quoted in Norway, confirmed it was “in receipt of a preliminary acquisition proposal” from Bayer, while stressing “there was no certainty” of a transaction.

“Discussions are at an early stage and further announcements may be made .. in due course,” it said in a statement.

The offer of NKr336 a share represents a 27 per cent premium to Algeta’s closing share price on Monday of NKr264.60 and helped push the company’s shares in early trading on Tuesday to NKr346.

The move comes as Bayer seeks to strengthen the portfolio of established and experimental products in its pharmaceuticals arm, while exploiting continued expansion in demand for oncology products.

The move implies confidence in the company’s recently launched compound for prostate cancer and could yet lead to a higher price and rival bids.

Andrew Baum, pharmaceutical analyst with Citi, said in a note: “Bayer always seemed to us the natural eventual acquirer for Algeta given its global collaboration.

“Given the potential levers for upside, we believe there is room for modest nudging up of the take out price.”

Bayer has already partnered with Algeta for Xofigo, its prostate cancer treatment, which generated $17m in sales in the third quarter after its launch in the US this year.

The German company has been seeking to expand sales following recent setbacks including US regulatory delays over approval of expanded uses for its cardiovascular drug Xarelto.

Bayer pays for the development costs of Xofigo while Algeta shares costs and profits on US sales. The German group is planning a gradual roll out of Xofigo in Europe following recent EU regulatory approval.

There is no change in ownership clause for Xofigo, implying other companies could launch rival bids for Algeta. Drug groups with competing prostate cancer therapies include Johnson & Johnson, Astellas, Amgen and Novartis.

Richard Parkes, pharmaceutical analyst at Deutsche Bank, said the Bayer bid implied peak sales for Xofigo of $1.5bn-$1.7bn. He said a rival offer was unlikely given the lack of synergies.

Algeta has partnerships with other pharmaceutical companies for its pipeline of other earlier stage cancer treatments, based on radium 223 and thorium 227.

Bayer said in a statement: “We confirm the existence of a preliminary non-binding acquisition proposal for Algeta.” It refused any further comment.

Algeta’s investors include Franklin Templeton, Wellingto

n and the Norwegian national pension fund.

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