Chinese drugmakers, PE firms—even, reportedly, a Big Pharma—pile into Stada deal action

Stada
German generics maker Stada is in high demand, with multiple PE outfits and drugmakers reportedly looking to team up on bids to buy it.

The race to snatch up generics maker Stada is heating up—and fast.

Just over two weeks after Boston private equity outfit Advent International put up the first legally binding bid for the drugmaker, multiple players are reportedly preparing to jump into the fray.

CVC Capital Partners, which held deal talks with Stada last year that would have helped the company dodge pressure from an activist shareholder, is ready to come back for another try, and it’s considering joining hands with a Chinese drugmaker to do it.

The private equity firm is in early-stage talks with Fosun Pharmaceuticals about a joint bid, Reuters reports, though Fosun—which is looking to continue down the global expansion path after acquiring India’s Gland Pharma last year—may instead decide to go solo on its Stada quest.

CVC is also talking with Shanghai Pharmaceuticals Holding about teaming up, Bloomberg says; sources tell the news service the companies will make a decision about pairing up as soon as next week.

For CVC, linking arms with a drugmaker could make a lot of sense. Pharma companies—unlike private equity groups—can squeeze costs out of an acquisition, so they can typically afford to bid higher. 

That’s not to say private equity-only duos aren't waiting in the wings, though. Advent may join forces with Permira, Bloomberg notes, and Singapore’s GIC is also interested in making an offer as an Advent coinvestor, the news service’s sources say. Bain Capital is in talks to join London’s Cinven, which has been in the mix from the start.

And it remains to be seen whether any drugmakers will show interest in Stada as a generics consolidation wave sweeps the industry. Analysts have floated Mylan as a good match, and StreetInsider reported on Thursday that Merck & Co. was working with Credit Suisse on an offer, though the New Jersey pharma giant doesn’t currently have any generics ops.

Whatever entrants do end up submitting bids for Stada will likely have to go past €3.6 billion if they want to come away victorious, Reuters points out. Confirmatory bids may match Advent’s at €58 per share, but sources expect that number to rise as high as €60.