The highest bidder for the acquisition of drugmaker Terapia Cluj-Napoca is a financial consortium comprised of the American investment fund Advent International and the Romanian branch of Dutch ING Bank, sources close to negotiations say.
Advent and ING Bank Romania offer $46-$50 million for Terapia, with the takeover handled through a limited liability company (Ltd. - SRL) established by a company from a tax haven (Cyprus or the Netherlands) in Romania, to register Advent International as shareholder, the quoted sources say.
They added the acquisition would be financed 60%-40% by Advent and the Dutch bank.
Advent International representatives did not care to comment on the information about takeover plans for Terapia.
In the race for Terapia, Advent and ING Bank outran one of the top players on the Romanian drug market, Icelandic group Pharmaco and another financial consortium comprising Global Finance and AIG New Europe Fund.
French group Servier has also looked into this opportunity. At some point in time it was even considered to be the most likely buyer for the Romanian drugmaker. The French were supposed to buy into Terapia through Egis, the second leading Hungarian drugmaker. Servier owns the controlling interests in Egis.
The highest bid coming from a financial consortium can be deemed as a surprise, as most analysts were expecting to see Terapia taken over by a strategic investor.
The company has been controlled by investment funds for three years, which have restructured it for sale to a medium or large pharmaceutical group for a good profit.
In case it buys the Romanian drugmaker, Advent International will have to add value to the company in order to sell it to a strategic investor and make good money.
Advent has tried to invest in the Romanian pharmaceutical industry before. Five years ago it attempted to buy Europharm Brasov, a company established by a Romanian businessman in 1992, which has turned into one of the top players on the Romanian drug market in the meantime. Europharm's controlling interests (65%) were eventually bought by UK-based SmithklineBeecham, now GlaxoSmithKline (GSK) for $29.25 million in 1998.
The latest major deal on the Romanian drug market took place at the end of 2000, when Slovenian Lek bought Pharmatech TSrgu-Mures.
Should the Advent representatives and Terapia shareholders (four investment funds and two trade companies) strike a deal, the takeover will need to be operated through a public purchasing offer run on the Bucharest Stock Exchange where Terapia is listed.
Terapia is trading at 4,450 ROL, with the market capitalisation reaching $40 million.
Terapia was put up for sale last year because the life span of two of the investment funds holding shares in the drugmaker, Romanian Investment Fund (17%) and Romanian Investment Company (20%) ends in 2003, so that they have to sell everything they own on the Romanian market.
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