Swedish drugmaker finds alluring poison pill

Investor AB

10/05/2023 12:04

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
       LONDON, May 10 (Reuters Breakingviews) - Sweden’s rare
disease drug maker is experiencing unfortunate deal side
effects. On Wednesday, shares in Swedish Orphan Biovitrum (SOBI)
 SOBIV.ST  fell 15% after it announced a plan to buy CTI
BioPharma  CTIC.O , a specialist in rare blood cancers, for $1.7
billion.
    On maths alone the deal looks promising. Although SOBI Chief
Executive Guido Oelkers is paying a whopping 95% premium for the
loss-making group, CTI’s profitability should rapidly rise as
Vonjo, a treatment for bone marrow disorders, rolls out. By 2027
it could make $308 million of operating profit according to
Visible Alpha, implying a 14% return on invested capital after
tax, even before factoring in any cost savings.
    Still, investors may have hoped for a more short-term
bounty. After all, Advent attempted to buy $6.5 billion SOBI
in 2021 but was thwarted by AstraZeneca  AZN.L , which owned 8%
of the company at the time. The Anglo-Swedish drugmaker refused
to tender its shares amid a squabble over the U.S. rights for a
respiratory drug. That headache has since been resolved, raising
hopes that another suitor would come knocking. But SOBI’s new
deal, which will be funded by a rights issue backed by main
shareholder Investor AB  INVEb.ST , suggests Oelkers has support
for a solo future. (By Aimee Donnellan) 

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 (Editing by Neil Unmack and Pranav Kiran)
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