(Bloomberg) -- Private equity firm EQT AB agreed to buy Swedish pharmaceuticals company Recipharm AB for $2.1 billion, marking the latest in a wave of drug industry acquisitions.
EQT said Monday it's offering shareholders 220 kronor in cash per share, 23% more than Friday's closing price. Recipharm is a 25-year-old company that specializes in outsourcing contract manufacturing services to help pharmaceutical companies develop new drugs.
The bid comes just two days after AstraZeneca Plc agreed to buy Alexion Pharmaceuticals Inc. for $39 billion in cash and shares. Other deals announced recently include Gilead Sciences Inc.'s $1.4 billion purchase of German hepatitis drug maker MYR GmbH and Boehringer Ingelheim's 1.2 billion-euro acquisition of NBE-Therapeutics.
Recipharm shares rose as much as 23% to 220.20 kronor, near the bid price, in Stockholm Monday morning. Handelsbanken analyst Peter Sehested said the offer is low in comparison with industry deals.
The company serves drugmakers by supplying products and services that include active pharmaceutical ingredients, placebos that look like real medicine for clinical trials, and analysis to determine the best way to formulate a drug.
Recipharm has said that a molecule it's developing, Erdosteine, appeared to help Covid patients recover after they were discharged from hospital. The company, whose biggest shareholder is the Swedish state with a roughly 16% stake, has seen its share price gain about 36% this year.
EQT is also proposing to give holders of Recipharm's senior unsecured convertible bonds 1.43 billion kronor ($170 million) in cash per 1 million kronor in aggregate principal of the convertible bonds.
Stockholm-based EQT has already secured ownership of about 25.7% of the shares and 74.3% of the votes in Recipharm through its chairman, Lars Backsell, and Thomas Eldered, its chief executive. The deal is worth 17.9 billion kronor, or about $2.1 billion.
EQT's offer is conditional on getting acceptance from shareholders representing more than 90% of the stock.
The private equity giant, which has seen its market value grow more than 180% since a September 2019 initial public offering, said taking Recipharm private would address the company's needs, amid “continued consolidation in the sector.” With the deal, EQT said its EQT IX fund is expected to be 25% to 30% invested.
The offer is fully financed by a combination of funds available to Roar BidCo, the vehicle through which EQT is making the bid, by way of an equity commitment letter issued by EQT IX.
Debt financing will be arranged via Goldman Sachs International, GS Mezzanine Partners, Broad Street Danish Credit Partners and GLQC Sarl.
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