Polish drug maker Polpharma working on bid for Advent's Zentiva - sources

Zentiva SA

20/01/2022 13:16

By Pamela Barbaglia
    LONDON, Jan 20 (Reuters) - Poland's largest drug maker
Polpharma is working on a possible $4 billion takeover of Czech
rival Zentiva and is looking for investors to join its bid in
return for a minority stake in the Advent International company,
three sources said. 
    Discussions between Polpharma and potential partners are at
an early stage and the Polish company has yet decide how it
would structure a joint bidding vehicle, the sources said on
condition of anonymity, warning that no deal was certain.
    Polpharma's move comes after Advent snubbed proposals from
banks last year for an initial public offering (IPO) of Zentiva
as stock market listings slowed down in the second half of 2021,
the sources told Reuters.
    Polpharma needs a deep-pocketed private equity firm to help
finance the bid that could value Zentiva at 3 billion to 3.5
billion euros ($4 billion) and it has hired JPMorgan  JPM.N  to
select potential investors, the sources said.
    A representative for Polpharma said it was "constantly
looking for acquisition targets and partnership opportunities in
its own and new territories", but declined to comment on any
specific deal.
    JPMorgan declined to comment while Advent was not
immediately available.
    Private equity firms have paid high prices to hoover up
large generic drug portfolios from major pharmaceutical firms in
recent years, playing a key role in the creation of big industry
players, but some are now looking to realise their investments.
    
    'PRICE IS KEY'
    The market for generic drugs is expected to grow from $411.6
billion in 2020 to $650.3 billion by 2025 at a compound annual
growth rate of 9.6%, according to a study by BCC Research.
    Boston-based private equity firm Advent bought Zentiva,
which makes a wide range of generic and over-the-counter drugs,
from French pharmaceutical giant Sanofi  SASY.PA  for 1.9
billion euros in 2018.
    Zentiva's medicines are sold in more than 40 countries and
the Prague-based company has manufacturing sites in the Czech
Republic, Romania and India, according to its website.
    Under Advent's ownership, Zentiva's core earnings have risen
to about 200 million euros through a series of acquisitions
including the takeover of British firm Creo Pharmaceuticals in
2019 and the purchase of the Central and Eastern European
business of rival Alvogen in 2020, one of the sources said.
    Zentiva, led by Chief Executive Nick Haggar, could be valued
at a multiple of more than 15 times its core earnings, the
source said, adding that its valuation surged after the full
integration of the Alvogen business.
    Advent, however, is in no rush to part ways with its
portfolio company and could back the business for another year
before exploring strategic options, two of the sources said.
    "The bid price is key to luring Advent to the negotiating
table," one of them said. "Advent is not running any auction
process. It is up to interested parties to force their hand."
    On Nov. 15, Zentiva denied a Czech press report that Advent
was looking to sell the company in a transaction worth between
2.4 and 3 billion euros.  urn:newsml:reuters.com:*:nL1N2S60F8
   ($1 = 0.8821 euros)

 (Reporting by Pamela Barbaglia; Editing by David Clarke)
 ((pamela.barbaglia@thomsonreuters.com;  +442075427723; Reuters
Messaging: pamela.barbaglia.thomsonreuters.com@reuters.net))