Exclusive: Apollo to bid for GlaxoSmithKline's mature drugs - sources

Thu Nov 13, 2014 1:16pm EST
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By Sophie Sassard and Freya Berry

LONDON (Reuters) - Apollo Global Management (APO.N: Quote) is planning to bid for all GlaxoSmithKline's (GSK.L: Quote) mature drugs, joining an auction expected to value the business at more than $3 billion, according to four people familiar with the process.

The private equity firm, run by Leon Black, could change the dynamic of the auction because it is ready to buy all the products on offer, while other potential buyers are looking to acquire only certain regional businesses.

GSK, which the sources said had asked for final bids by early next week, might find it simpler to deal with a single buyer, although the company has made clear that maximising shareholder value is the top priority of the divestment.

Other potential bidders include private equity firm KKR (KKR.N: Quote), which has teamed up with private Dutch-based specialty drugmaker Norgine, and Denmark's Lundbeck (LUN.CO: Quote).

It is unclear whether Indian drugmaker Lupin (LUPN.NS: Quote) or other private equity firms are still in the running.

GSK, Britain's biggest drugmaker, is looking to divest its mature prescription medicine products sold in North America and western Europe in a bid to improve its growth profile.

The drugs on the block, known as established products, are expected to have combined 2014 sales of around 1 billion pounds ($1.6 billion), although their sales are declining due to competition from cheaper generics.

The sources said GSK was looking for a multiple of more than two times sales, suggesting a price of at least $3.2 billion.   Continued...

The signage for the GlaxoSmithKline building is pictured in Hounslow, west London June 18, 2013. REUTERS/Luke MacGregor