Sanofi beats Novo Nordisk with €3.9bn Ablynx deal
Biotech blockbuster acquisition is second in a week and latest in sector M&A boom
France’s Sanofi will pay €3.9bn to acquire Belgian biotech group Ablynx in a second blockbuster deal in a week that underscores the pressure on pharma groups to replenish their drug pipelines.
Sanofi has agreed to pay more than double Ablynx’s share price from earlier this month when Danish rival Novo Nordisk made a first public takeover approach. In response, Novo Nordisk said that it was dropping its interest, saying that it would not pursue “unrealistic premiums”.
The transaction lifts the total amount of mergers and acquisitions in the pharmaceutical sector to almost $40bn in January, marking the biggest month for healthcare dealmaking in over a decade as companies are being forced to pay high premiums for businesses.
So far this year, buyers of healthcare companies have agreed to pay an average premium of 79 per cent, according to data provider Dealogic — well above the 42 per cent typically paid in 2017.
Shares in Ablynx soared 19.5 per cent in Brussels trading to €44.36, just shy of the €45 per share offer from Sanofi. The bid is a 48 per cent premium to the €30.50 per share offer from Novo Nordisk on January 8, which Ablynx had resisted, and more than double the company’s undisturbed price before that offer was unveiled.
Sanofi has been under pressure to find a deal to plug the revenue gap left by declining sales of its diabetes medicine Lantus, which lost patent protection and is facing competition from cheaper rivals. It missed out on two big acquisitions in the past two years: cancer treatment specialist Medivation in 2016 and Swiss biotech group Actelion last year.
“The Ablynx acquisition makes strategic sense and fits nicely into Sanofi's portfolio,” said Alistair Campbell, an analyst at Berenberg. “However, from a valuation point of view, Sanofi has paid a lot for Ablynx. Their hand was forced a bit by Novo's earlier bid for it."
The acquisition follows Sanofi’s deal for Bioverativ, a US biotech group focused on haemophilia treatments. The French drugmaker announced last week that it would buy Bioverativ for $11.6bn, a 64 per cent premium to its undisturbed price.
On a call with reporters on Monday, Sanofi chief executive Olivier Brandicourt said that “the shareholder value may be longer term” for the Ablynx deal compared with Bioverativ, but pointed to the advantages of owning its most advanced treatment, caplacizumab.
This treats an unusual disorder in which blood clots form in small vessels through the body. It is set for European approval later this year and to be launched in the US in 2019, according to a note from Jefferies, which described it as “a potential game-changer.”
After Novo Nordick’s bid became public in January, Sanofi began to conduct due diligence on Ablynx. Sanofi decided to approach the company, which it had worked with already for several years, when it saw that an acquisition could make strategic sense, according to a person who worked on the deal.
Novo said on Monday that it would not make a revised proposal for Ablynx. When asked if Novo believed Sanofi had overpaid for the asset, Jesper Brandgaard, the Danish drugmaker's chief financial officer, told the Financial Times he would “not speculate on the value of Ablynx for Sanofi”.
He added: “I just note it is a substantial premium of more than 60 per cent on the cash offer we made on December 22 and about a 50 per cent premium on the total offer we made and we have not made any proposal to Ablynx's board of directors since then.”
Mr Brandgaard denied that losing out on Ablynx represented a setback for Novo. He said: “This was not feasible for us to do at what we felt was a meaningful value. I don't think our shareholders should suffer from us pursuing unrealistic premiums and hence we will be looking for other assets."
Morgan Stanley and Lazard are advising Sanofi on the transaction. JPMorgan is advising Ablynx.