Roche chief tamps down talk of $13.5B BioMarin buyout

Roche CEO Severin Schwan

Roche CEO Severin Schwan put the kibosh on chatter about its supposed plans to raise funding for a BioMarin Pharmaceutical ($BMRN) buyout. According to Dealreporter, the Swiss drugmaker ($RHHBY) is eyeing a bid for the smaller biotech, in a deal worth up to $13.5 billion.

While declining to comment on the deal talk itself, Schwan pooh-poohed any hunt for funding. "We don't have a need to raise capital," he said (as quoted by Bloomberg). "Investors ask us what we are going to do with all that cash."

Schwan left it to analysts to speculate about the likelihood of a $95- to $105-per-share offer for BioMarin, as Dealreporter had reported. BioMarin, which primarily specializes in rare diseases, brought in about $500 million in 2012 sales, Bloomberg notes, and it's expected to turn in sales growth of 20% for 2014 and 2015. When the Roche report hit, BioMarin shares jumped by almost 10%, Reuters notes.

Dealreporter's sources said that Swiss-based bank UBS has signed on to lend $5 billion to Roche for the deal. It also reported that Citigroup is advising Roche on the deal, and additional financing could come from JPMorgan Chase & Co. and Goldman Sachs.

There are a couple of holes in the BioMarin buyout theory, however. First, Roche has a reputation for disciplined dealmaking--and BioMarin wouldn't be a cheap date. As Raiffesisen Capital Management fund manager Connie Schuemann told the news service, BioMarin has some obvious strengths--"But it comes at a high price."

Vontobel Analyst Andrew Weiss was more adamant: "[T]his would be a waste of money," Weiss told Bloomberg, noting that the quoted price would be 40% more expensive than the company Roche was previously said to be buying, Alexion ($ALXN). In July, Reuters sources reported that Roche was shopping for financing to buy that U.S. based company, which also specializes in rare diseases.

And as Reuters now notes, Roche has said that it's not salivating after rare disease drugs, unlike other companies that have jumped into the space already. Roche's pharma chief told the news service last week that ultra-rare diseases pose their own special challenges that are distinct from Roche's own circle of expertise.

"Orphans are not a strategic imperative for Roche." Weiss told Bloomberg. "They look for things that make sense and if something happens to be an orphan, so be it."

- read the Bloomberg story
- get more from Reuters

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