Stada stymied in bids for Russian M&A

Germany's Stada wants to expand in Russia. But attempts to buy Russian drugmakers have so far failed--despite months of effort--leaving the company with a big debt burden and stagnant home market, Reuters reports.

You can't fault Stada for trying: The company has been investing in production capacity, aiming to fight other German generics makers for government contracts. And its bid to expand in Russia is perfectly rational. As Reuters points out, the country is already Stada's second-largest market, and generics growth there is expected to reach 13%. Pumping up its Russian business could help generate cash to ease its financial strains.

Plus, Stada has successfully acquired other Russian companies (in 2005 and 2007). So when Russian oligarch Viktor Kharitonin contacted Stada about a possible merger with Pharmstandard, the company jumped into talks. The Russian government was behind the deal, too, offering capital for expansion, Reuters says. Unfortunately, Stada's board nixed the deal over concerns the Russian partners would have too much power.

Then, Stada turned its sights on Valenta, which was put up for auction in late 2010. The auction ended without a deal, but Valenta asked Stada to talk afterward. The two companies were nearing a deal for Valenta's marketing network and IP--they had ministerial approval and were only 10% apart on price--but that deal collapsed last year. Will another attempt be next?

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