May 28, 2009 / 3:22 PM / 11 years ago

Solvay to get bids for drug unit Friday: sources

LONDON (Reuters) - Solvay SA (SOLB.BR), the Belgian chemicals, plastics and drugs company, is set to receive a range of proposals for its pharmaceutical unit by Friday’s deadline for indicative bids, people familiar with the matter said.

Belgium's Christian Jourquin, chief executive officer of Belgian drug and chemicals maker Solvay, presents the annual results of the company in Brussels February 19, 2009. REUTERS/Thierry Roge

Analysts say the business, whose research focuses heavily on cardiometabolic and neurological treatments, could fetch 5 billion euros ($6.9 billion) or more.

Novartis AG NOVN.VX and Japan’s Takeda Pharmaceutical Co Ltd (4502.T) are among the big pharmaceutical companies likely to bid, two of the people said.

However, Abbott Laboratories (ABT.N) — Solvay’s partner for its cholesterol-fighting blockbuster TriCor — is unlikely to submit an offer, they said.

Solvay disclosed it was considering selling the unit soon after a report it had been approached by Sanofi-Aventis (SASY.PA). Analysts have also named Germany’s Bayer BAYG.DE as another possible acquirer.

So far Solvay, one of Europe’s last remaining drug-chemical “hybrids,” has kept its options open for the unit, saying it is mulling alternatives such as a stock market flotation, a partnership, or growth through acquisitions.

The strength and quantity of first-round bids for the unit could help it decide whether to proceed with a sale.

Indicative offers are likely to range widely in value, the people familiar with the matter said. One said bids could be as low as 3.5 billion euros, while a second said they could reach 5.5 billion.

A third person familiar with the matter said some suitors were likely to propose acquiring parts of the business rather than the whole. One possibility could be to sell Solvay’s market-leading influenza vaccines business Solvay Biologicals, already run as a separate company.

A smaller group of suitors is likely to be picked in a week or so for the second round of the auction, this person added.

Healthcare is one of the few bright spots in mergers and acquisitions (M&A) this year. While overall dealmaking has slumped 38 percent, global healthcare M&A rose 71 percent in the year to May 21, thanks mainly to two enormous U.S. deals.

Smaller deals are also proceeding, helped by the sector’s relative resilience during the financial crisis, and the financial firepower of many larger pharmaceutical companies.

Solvay is 30 percent owned by holding company Solvac (SOAC.BR).

Citigroup, Morgan Stanley and Rothschild are running the sale, sources familiar with the matter have said previously.

Solvay, Abbott and Takeda were not immediately available to comment. Novartis declined to comment.

Additional reporting by Aaron Gray-Block in Amsterdam and Ransdell Pierson in New York; Editing by David Holmes and Rupert Winchester

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