TheChek News Flow

While negotiations continue between the two certification giants, the British inspection group is pushing to back the French company. As in 2024.

Could the scenario of an XXL merger between the inspection giants Bureau Veritas and SGS be disrupted by a third party? According to our information, one of their competitors, the British Intertek, is trying to interfere in the debates. The latter, which is supported by several advisors, including JP Morgan, is campaigning in favor of a merger with Bureau Veritas, itself assisted by Morgan Stanley while the boutique Zaoui & Co advises its first shareholder, Wendel. Intertek and Bureau Veritas have already very seriously explored this avenue last year, as revealed by the Financial Times. It was after this track was abandoned that the French company was led to explore a deal with SGS (here advised by Goldman Sachs and Citigroup). But, in reality, Intertek has not given up, l’Informé has learned, and is trying to reverse the trend in its favor. “It is not necessarily very smart to try to interfere in a marriage between two players who are talking amicably,” observes a source close to Bureau Veritas.

The scenario of a marriage between Intertek and Bureau Veritas turns out to be significantly different from a union between the latter and SGS. In the first combination, it is the French group that appears as the consolidator: its stock market value amounts to 14 billion euros, while that of its British competitor currently stands at 8 billion. Between Bureau Veritas and SGS, however, the size turns in favor of the Swiss: valued at 17 billion, it would play the role of the absorbing company - in a scheme that could involve a public exchange offer with an acquisition premium as revealed by l'Informé. In this scenario, the center of gravity of the new group would lean more towards Switzerland... While Bureau Veritas has just entered the CAC 40. The specter of the Lafarge-Holcim deal, which, from a marriage between equals ended up leading to a pure and simple absorption of a French flagship by a foreign group, is not very far away.

According to our information, Intertek is trying to plead its case to the State. The British company - whose chairman of the board of directors is a Frenchman, André Lacroix - is particularly targeting Bpifrance. The public investment bank had taken 4.2% of Bureau Veritas' capital in April 2024, at the time when Wendel had chosen to place 9% of the group's capital on the market, thus reducing its stake to 26.5% (and 41% of voting rights). Bpifrance's arrival in the capital took place at a time when negotiations with Intertek had paused. Its stake was acquired through the Lac1 fund, a vehicle set up to stabilize the shareholding of large French groups... and in particular to help them act as a consolidator in their market. This suggests that Bpifrance was indeed aware of the negotiations with Intertek. However, a source close to the public bank informed L'Informé that no contact has been established to date with the British group.

The next fortnight should in any case be decisive for the discussions between Bureau Veritas and SGS. And this is under the watchful eye of the stock market, where SGS shares have eroded by 8% since the talks were made official early on January 15, while Bureau Veritas shares are now up only 1.5% after having risen by 5% in the immediate term. The markets will be particularly attentive to the industrial rationale of a merger, as well as the commercial and cost synergies that they expect to derive from it. They will also have to explain how new savings could be articulated with the slimming cure announced last year by SGS: the group had announced that it wanted to make 100 million Swiss francs (110 million euros) of cuts by the end of 2025. Several sources report 400 to 500 million euros of synergies expected by the parties. For comparison, Bureau Veritas generated revenues of €5.8 billion for adjusted operating profit of €930 million. SGS generated revenues of CHF6.6 billion (€7.1 billion) for profit of CHF971 million (€1 billion).

When contacted, Wendel and Bureau Veritas declined to comment. Intertek had not responded to our requests at the time of publication.

Alors que les négociations se poursuivent entre les deux géants de la certification, le groupe d’inspection britannique pousse pour s’adosser au Français. Comme en 2024.

Le scénario d’un rapprochement XXL entre les géants de l’inspection Bureau Veritas et SGS pourrait-il être bousculé par un troisième larron ? Selon nos informations, l’un de leurs concurrents, le britannique Intertek, tente de s’immiscer dans les débats. Ce dernier, qui est épaulé par plusieurs conseils, dont JP Morgan, milite en faveur d’un rapprochement avec Bureau Veritas, lui-même assisté par Morgan Stanley alors que la boutique Zaoui & Co conseille son premier actionnaire, Wendel. Intertek et Bureau Veritas ont déjà très sérieusement exploré cette piste l’an passé, comme l’a révélé le Financial Times. C’est après l’abandon de cette piste que le Français a été amené à explorer un deal avec SGS (ici conseillé par Goldman Sachs et Citigroup). Mais, en réalité, Intertek n’a pas renoncé, a appris l’Informé, et essaie d’inverser la vapeur en sa faveur. « Ce n’est pas forcément très malin de tenter d’interférer dans un mariage entre deux acteurs qui discutent amicalement », observe cependant une source proche de Bureau Veritas.

Le scénario d’un mariage entre Intertek et Bureau Veritas s’avère sensiblement différent d’une union entre ce dernier et SGS. Dans la première combinaison, c’est le groupe tricolore qui apparaît comme le consolidateur : sa valeur en Bourse s’élève à 14 milliards d’euros, quand celle de son concurrent britannique se chiffre aujourd’hui à 8 milliards. Entre Bureau Veritas et SGS, la taille tourne en revanche en faveur de l’Helvète : valorisé 17 milliards, il jouerait le rôle de la société absorbante - dans un schéma qui pourrait passer par une offre publique d’échange avec une prime d’acquisition comme révélé par l’Informé. Dans ce scenario, le centre de gravité du nouvel ensemble pencherait plutôt vers la Suisse… Alors que Bureau Veritas vient de faire son entrée au CAC 40. Le spectre du deal Lafarge-Holcim, qui, d’un mariage entre égaux a fini par aboutir à une absorption pure et simple d’un fleuron tricolore par un groupe étranger, n’est pas très loin.

Selon nos informations, Intertek essaie de plaider sa cause auprès de l’Etat. Le Britannique - dont le président du conseil d’administration est un Français, André Lacroix - cible particulièrement Bpifrance. La banque publique d’investissement avait pris 4,2 % du capital de Bureau Veritas en avril 2024, au moment où Wendel avait choisi de placer 9 % du capital du groupe sur le marché, réduisant ainsi sa participation à 26,5 % (et 41 % des droits de vote). L’arrivée de Bpifrance au capital s’était réalisée au moment où les négociations avec Intertek avaient marqué une pause. Sa prise de participation s’était réalisée au travers du fonds Lac1, un véhicule constitué pour stabiliser l’actionnariat de grands groupes tricolores… et notamment les aider à agir en consolidateur dans leur marché. Ce qui laisse penser que Bpifrance était bel et bien au courant des négociations avec Intertek. Une source proche de la banque publique fait néanmoins savoir à L’Informé qu’aucun contact n’est établi à ce jour avec le groupe britannique.

Les quinze prochains jours devraient en tout cas être décisifs pour les discussions entre Bureau Veritas et SGS. Et cela sous le regard attentif de la Bourse, où l’action SGS s’est érodée de 8 % depuis l’officialisation des pourparlers, tôt le 15 janvier, quand celle de Bureau Veritas n’est plus qu’en hausse de 1,5 % après être montée de 5 % dans l’immédiat. Les marchés seront particulièrement attentifs au rationnel industriel d’un rapprochement, ainsi qu’aux synergies commerciales et de coûts qu’ils comptent tirer de celui-ci. Elles devront aussi expliquer comment de nouvelles économies pourraient s’articuler avec la cure de minceur annoncée l’an passé par SGS : le groupe avait communiqué vouloir réaliser 100 millions de francs suisses (110 millions d’euros) de coupes d’ici fin 2025. Plusieurs sources font état de 400 à 500 millions d’euros de synergies attendues par les parties. À titre de comparaison, Bureau Veritas a totalisé 5,8 milliards d’euros de chiffre d’affaires pour 930 millions d’euros de bénéfice opérationnel ajusté. SGS, lui, a généré 6,6 milliards de francs suisses de revenus (7,1 milliards d’euros) pour 971 millions de francs suisses de résultat (1 milliard d’euros).

Contactés, Wendel et Bureau Veritas n’ont pas souhaité faire de commentaires. Intertek n’avait pas donné suite à nos sollicitations au moment où nous publions ces lignes.

A third of patients lost at least a quarter of their weight, the late-stage trial showed

Novo Nordisk said that patients taking a higher dose of its blockbuster Wegovy obesity shot lost more weight than those on a lower dose without experiencing an increase in side effects, according to a new study.

The late-stage trial of semaglutide, which it markets as Wegovy to treat obesity, showed that those who took a once-weekly dose of 7.2 milligrams lost an average of 20.7% of their weight over 72 weeks.

A third of those patients lost at least 25% of their weight in the trial that was dubbed Step Up, it said.

Sydbank senior analyst Soren Lontoft Hansen said he was expecting an outcome of around 20% weight loss. Although it is a positive result, it isn’t super data, he said.

“This was more of an exploratory study. The higher dose will contribute to its portfolio and help cater to individual’s differing needs,” he said.

Shares were 4.1% lower in afternoon European trade as investors also digested news that semaglutide will be subject to U.S. government price negotiations that aim to lower the price that Medicare pays for certain drugs.

The Step Up trial was conducted to test the efficacy of the higher dose, as the current highest dose available is 2.4 milligrams. Those taking 2.4 milligrams lost an average of 17.5% of their weight in the trial.

Novo Nordisk said the higher dose appeared to have a safe and well-tolerated profile, consistent with other drugs of the same class.

The most common adverse events were gastrointestinal, the vast majority of which were mild to moderate and diminished over time, it said.

Patients in the trial didn’t have diabetes, but Novo Nordisk is conducting a second late-stage trial of the higher dose with obese patients who have Type 2 diabetes. Results are expected within the next few months.

The trial results come just weeks after the Danish pharmaceutical giant reported disappointing results of a closely watched clinical trial testing an experimental anti-obesity treatment. The company had hoped the two-drug combination, called CagriSema, would be the new best-in-class treatment by helping patients lose at least 25% of their weight. But the trial showed it achieved an average of 22.7% weight loss after more than a year’s treatment, roughly in line with Eli Lilly’s Zepbound, which is already available.

Public or private, investment banks win either way

Despite the trend for start-ups to delay their flotation, bankers can still find a way to make money

When David Solomon publicly downplays the value of companies going public, it might sound like a turkey voting for Christmas. The Goldman Sachs boss said on Wednesday that the reasons for start-ups to consider an initial public offering “are getting pushed out”. He is right. Fortunately banks like Goldman can still mint plenty of fees.

The trend for start-ups to stay private longer has been building for a decade or so. Deep pools of venture capital were not so readily available for companies seeking cash and liquidity in the noughties.

Social media forum Reddit waited almost two decades to go public, which it finally did last year. Buy-now-pay-later company Klarna, also founded in 2005, will have hit the 20-year milestone even if its IPO comes this year, as is expected. Compare that with Google — now Alphabet — which listed just six years after its genesis, or Facebook — now Meta Platforms — which went from dorm-room project to Nasdaq constituent in eight.

Despite some ebbing over the past decade, VC remains buoyant. Tiger Global, Sequoia Capital and Andreessen Horowitz lead the pack. But corporates are in on the act too. Google Ventures has a $10bn-plus portfolio composed of over 400 companies. Chipmaker Nvidia invested over $1bn across 50 funding rounds for AI start-ups alone last year. That money is worth more to a start-up — in terms of patient capital, expertise and potential marketplace — than ringing the Nasdaq bell.

Where bankers can’t serve as IPO underwriters, they can still be matchmakers. They have access to the VC arms, institutions, sovereign wealth funds and family offices whose funding late-stage start-ups covet. The universe of potential backers could expand, regulation willing, as mom and pop get in on the act. Modest perhaps but even Twitter’s $1.8bn IPO left underwriters sharing a $68mn fee pool.

Another role comes from facilitating exits, including secondary sales for current or former employees. These tender offers are popular with later stage start-ups, including financial payments group Stripe, which appointed Goldman Sachs to steer its offer last year. In Europe, Morgan Stanley acted on fintech Revolut’s share sale for employees last year. Exchanges for private shares — Nasdaq’s SecondMarket or the London stock exchange’s upcoming PISCES market — will still require banker input.

In one way, the bigger the hype around companies staying private, the more Goldman stands to distinguish itself as a provider of so-called alternative investments to its clients, on which it charges handsome fees. Those now make up $333bn of its assets under supervision — and their 20 per cent growth rate over the past year is almost twice the increase in Goldman’s overall AUS. The music hasn’t stopped for banks; it’s just that the tune is changing.

Arrest of FTSE 100 pharma group’s country president last year is expected to hit sales

AstraZeneca has overhauled its local management in China in a bid to move on from recent scandals and revive sales after the arrest of its president in the country. 

The FTSE 100 group has appointed new executives to lead its Chinese oncology business, which has come under intense scrutiny over two incidents including alleged illegal sales practices for cancer drugs.

The scandal ensnared the China president Leon Wang, who the company announced in November had been detained, along with several other employees. AstraZeneca shed more than £15bn off its market capitalisation after reports about an investigation by local authorities. 

Alex Lin is replacing Michael Lai as country general manager, according to two people with direct knowledge of the matter. Lai was one of Wang’s senior managers. Lai has moved to the US to be in charge of a key cancer drug for AstraZeneca and report to the head of oncology, according to people close to the company. Lai did not respond to a request to comment.

The drugmaker has promoted Mary Guan, who was previously at its Chinese general medicines unit, to lead oncology in China as part of a move to deal with the department, according to one person familiar with the matter. 

AstraZeneca declined to comment. It has previously said that it would fully co-operate with the Chinese authorities, and also that Wang was co-operating with the investigation.

The drugmaker — the largest foreign pharmaceutical group in China by revenues in 2023 — is trying reboot its business in China where insiders report they are expecting a dip in sales due to hospitals being unwilling to deal with the company. The new management will be pivotal to putting AstraZeneca back on course in what was once its most important growth market. China contributed 13 per cent of global sales in 2023.

The company wants to “show that there has been a clean cut with the old management,” said one person familiar with its position. 

Another person said there are “a lot of changes expected in the China Leadership team but they have not yet been announced”.

AstraZeneca executive Iskra Reic was appointed in early December to take over from Wang, who also ran the international region that includes other emerging markets. 

“AstraZeneca has distanced itself from Leon and the other affected employees,” said one person close to the company. 

They added that Wang had been under “a lot of pressure to rejuvenate growth” after China revenues declined in 2022. 

AstraZeneca leadership has received no formal explanation from Chinese authorities and has not been able to contact Wang, according to people familiar with the matter. The company has concluded that the probe is about the alleged illegal importation of cancer drug Imjudo through Hong Kong to China — where the drug is not approved — because authorities also detained AstraZeneca’s former head of oncology, Yin Min, who was in charge of the department during the alleged offences. 

Separately, scores of salespeople were convicted over the past two years for medical insurance fraud after the courts found they tampered with genetic test results to ensure lung cancer patients qualified for their drug Tagrisso under a national reimbursement scheme. 

The drugmaker is pinning much of its hopes in China on its breast cancer drug Enhertu, which authorities recently said would be included in the state health insurance scheme. 

List of drugs account for $41 billion in annual Medicare spending, Biden administration says

The U.S. government named 15 drugs that will be subject to the second round of price negotiations by Medicare, including Ozempic and Wegovy, the drugs at the center of the weight-loss craze.

The Biden administration said the drugs account for $41 billion in annual Medicare spending, and that price negotiations could result in significant savings. U.S. health officials selected the drugs because they account for high Medicare spending due to widespread use or high price tags.

“We have a chance to negotiate a better deal for the American people,” said U.S. Secretary of Health and Human Services Xavier Becerra. “We can try to save them once again billions of dollars.”

On the list of target medicines are treatments for cancer, type 2 diabetes, and asthma.

The government last year negotiated lower prices for the first 10 drugs selected for the new negotiating powers Medicare received from the Inflation Reduction Act of 2022. Those prices will take effect next year in Medicare, the government health insurance program for the elderly and some disabled people. Biden touted $6 billion in savings for taxpayers this year from those negotiations in his farewell letter Wednesday.

The hottest drug on the list is Novo Nordisk’s semaglutide, sold under the brands Ozempic and Wegovy and at the heart of the weight-loss boom that has made Novo NOVO.B -2.59%decrease; red down pointing triangle a fortune.

Semaglutide likely accounted for about $7.5 billion in gross spending by Medicare drug-benefit plans in 2023, according to research in the Journal of Managed Care & Specialty Pharmacy, by health-policy researchers from the University of Washington and the University of California, San Diego. The drug’s global sales were estimated to be about $28 billion last year, according to Factset.

A steep price cut for semaglutide in Medicare could dent Novo’s sales growth modestly, though analysts still expect semaglutide’s global sales to double over the next four years.

A price cut, however, could save Medicare and its members billions of dollars.

“There’s going to be pretty significant savings to Medicare,” said Sean Sullivan, a professor of pharmacy and health policy researcher at the University of Washington.

A price cut for semaglutide in Medicare could also have spillover effects, pressuring prices for Eli Lilly’s LLY 1.45%increase; green up pointing triangle Mounjaro diabetes drug and Zepbound for weight loss, Sullivan said.

Semaglutide is sold as Ozempic and Rybelsus for diabetes, and Wegovy for obesity. All three brands will be treated as a single drug for Medicare price negotiations purposes because they share the same main ingredient.

Ozempic accounts for most of the Medicare spending on semaglutide, but Wegovy is poised for higher spending. Last year, some Medicare drug plans began covering Wegovy for people with both excess weight and cardiovascular disease. The Biden administration proposed expanding Medicare coverage to include its use in people with obesity alone, though that hasn’t taken effect and its fate is uncertain under the incoming Trump administration.

If Medicare were to cover anti-obesity drugs, it would increase federal spending by about $35 billion from 2026 to 2034, the Congressional Budget Office estimated last year. The CBO predicted semaglutide would be selected for negotiation and that its price would fall substantially beginning in 2027.

Semaglutide sells for list prices ranging from $997 a month for Ozempic and Rybelsus to $1,349 a month for Wegovy.

Federal negotiators will be seeking a much lower price. Already, Novo Nordisk offers rebates and discounts that have cut roughly 50% or more off list prices, analysts say.

As a result, U.S. government negotiators are expected to use those existing net prices as a ceiling for their offers, to seek further cuts that go beyond 50% off the list price.

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