According to a report published Thursday, Roche is arranging financing of $15 billion in a bid to acquire BioMarin Pharmaceutical. DealReporter, citing people familiar with the situation, said that Roche may have to pay $95 to $105 a share to buy BioMarin, with the lower end of the range representing a 23-percent premium to the company's closing stock price on September 18.
However, while Roche CEO Severin Schwan declined to comment on "rumours" of such a deal, he stated the drugmaker has not been in the market to raise money, saying "we don't have a need to raise capital." The report suggested that Roche's management was planning on approaching BioMarin earlier in the week about a possible takeover, although it is unclear whether a formal approach has been made. Shares in BioMarin, which focuses on developing drugs to treat rare diseases, rose as much as about 10 percent on the news.
BioMarin generated sales of $500.7 million last year, and analysts forecast its revenue will increase by at least 20 percent in 2014 and 2015. Among BioMarin's drug candidates is the PARP inhibitor BMN-673, which targets a narrow set of women with BRCA1 and BRCA2 mutations, and for which it is planning a Phase III trial. Schwan remarked that bidding wars for companies with products in later stages of development don’t appeal to Roche, adding "if there was a good strategic opportunity out there, I’d go after it."
In July, a report said Roche was interested in buying Alexion Pharmaceuticals, which also develops medicines for rare conditions. Commenting on the BioMarin speculation, Vontobel analyst Andrew Weiss said a bid for the biotechnology firm would counter Roche's record of "financially disciplined" takeover negotiations. He suggested that if the report were accurate, "this would be a waste of money" at 40-percent more expensive than Alexion, as measured by enterprise value to sales. Weiss remarked that "orphans are not a strategic imperative for Roche. They look for things that make sense, and if something happens to be an orphan, so be it."
For more analysis, read ViewPoints: M&A rumour mill gathers pace, but analysts pour cold water on Roche/Alexion deal.
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