Novartis offloads share of LTS Lohmann to SAP billionaire Hopp, gaining $400M

Dietmar Hopp

For the past 8 months, Novartis ($NVS) and its partners have been trying to sell the skin-patch maker LTS Lohmann. Two private equity firms appeared ripe for a potential $1.7 billion deal. But that didn't happen. Now, Novartis and the German investment firm BWK are selling their shares in LTS to fellow owner Dietmar Hopp, the German billionaire who's best known for co-founding the software giant SAP.

Novartis, which owned 43% of LTS and is its biggest customer, expects an after-tax gain of $400 million from the sale, according to Reuters. Hopp had held about 30% of the company through his investment firm, dievini Hopp BioTech, and his stake will now grow to 96%. LTS had been talking with other potential buyers--including Germany's Evonik Industries and the private equity firms Nordic Capital and Wendel--but couldn't agree on a price with anyone but Hopp, according to Reuters.

LTS brings in about $406 million a year in sales of nicotine patches and other transdermal drugs, including treatments for Parkinson's disease and restless-legs syndrome, Reuters reports. Hopp's interest in LTS isn't surprising, considering the growing demand for medicinal skin patches. Several other companies are stepping up to meet that demand, including 3M ($MMM), Beiersdorf's Tesa Labtec unit, and generics giant Mylan ($MYL), which expanded its transdermal patch factory in Vermont last year. Another rival, Acino, built a plant in Germany to manufacture Bayer's birth control patches.

Novartis' lengthy quest to sell LTS may seem surprising in today's deal-hungry pharma landscape, but it's far from the first seller to struggle to find a buyer. Private equity firms are sitting on a record $1.2 trillion in cash and some have been quite vocal about their intentions to pick up Big Pharma assets. And megamergers and asset swaps between drug companies continue to shake up Wall Street. But these buyers can be picky, as the family that owns Italian drugmaker Rottapharm learned when they tried--and failed--to sell part of their stake to private equity firms or pharma companies.

- here's the Reuters story

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