Advent in direct talks to buy Sanofi's generics arm Zentiva

Advent in direct talks to buy Sanofi's generics arm Zentiva
Zentiva is active in more than 50 markets, with a strong presence in Czechia, Slovakia and Romania
By Jaroslav Hroch in Prague April 18, 2018

French pharmaceutical group Sanofi has entered exclusive talks with the US private equity company Advent International to sell its the Europe generic drugs branch Zentiva for CZK48bn (€1.9bn), the companies stated on April 17.

The transaction would be among the biggest in the Czech mergers and acquisitions market, which last year hit a record-breaking volume of CZK240bn (€9.5bn), a 16% y/y rise, with the Czech market the most active in the CEE region after Poland.

Zentiva has a seat in Prague and is present in more than 50 markets. It holds the strongest positions in the CEE region, especially in Czechia, Slovakia and Romania, with manufacturing facilities in Prague and Bucharest.

Advent aims to invest in Zentiva towards creating an independent European leader in generic drugs. For Sanofi, the sale is part of its strategy to reorganise and simplify the company.

“Following a comprehensive review of strategic options for our generics unit in Europe, we have determined that transferring this business to Advent is the best option to ensure its long-term success,” Sanofi chief executive Olivier Brandicourt said in a statement.

Jerome Schupp, a fund manager at Geneva-based Prime Partners, which holds no Sanofi shares at present, said the sale price is decent, but not extraordinary. “Sanofi will probably re-invest the proceeds in looking to make pharma or biotech acquisitions. They are looking to strengthen their pipeline, which is a bit weak at the moment,” he told Reuters.

According to the news agency, the planned sale of Zentiva began in October 2017, with Sanofi expecting to spend a year preparing for the spin-off, transferring the generics unit into single, separate company.

Goldman Sachs, JP Morgan and Morgan Stanley are expected to lead a debt financing in excess of €1bn to secure Advent but await the formal mandate, Reuters reported on April 17. 

Founded in 1984, Advent International has grown to become among the biggest private investment funds in the world with assets of €35bn.

Zentiva produces and distributes more than 350mn drugs packages annually. In 2016, its net profit rose 6.4% to CZK211.4mn.