Belgian pharmaceuticals, chemicals and plastics maker Solvay is selling its pharmaceuticals unit to US partner Abbott Laboratories for Ôé¼4.5 billion, it announced today.
The deal will raise cash for the Belgian firm to invest in the expansion of its core plastic and chemicals businesses.
In addition to the purchase price of Ôé¼4.5 billion, Illinois, US-based Abbott will also pay up to another Ôé¼300 million in contingent payments between 2011 and 2013, depending on the performance of certain products.
The deal will add more than $3 billion (Ôé¼2 billion) to AbbottÔÇÖs annual sales, most of which will come from overseas.
Brussels-based Solvay said in April that it could be interested in selling its pharmaceuticals arm as R&D, production and legislation around new products becomes more expensive, time-consuming and complex.
At the same time, there has been a big push for consolidation within the pharmaceuticals industry, with major players such as Pfizer and Merck & Co making big acquisitions this year despite the economic downturn.
ÔÇ£We are building a new refocused Group with the financial means to further accelerate sustainable growth on todayÔÇÖs strong foundations,ÔÇØ said Christian Jourquin, SolvayÔÇÖs CEO.
ÔÇ£Our philosophy is unaltered: realizing sustained growth with leading positions and stick to a conservative financial structure. The proceeds from the divestment will be reinvested in external and organic growth with a sharp focus on long term value creation.ÔÇØ
Abbott will use the purchase of SolvayÔÇÖs business, its biggest since 2002, to expand into new markets such as Eastern Europe and Asia, where it has so far had limited presence. The deal also gives it full control of the TriCor cholesterol drug, lowering its dependence on the arthritis drug Humira, its biggest product, with $4.5 billion in annual sales.
Swiss drug company Nycomed, which is owned by private equity firms, was also bidding for Solvay. Prior to AbbottÔÇÖs involvement, it was widely predicted to win the auction, with its bid of up to Ôé¼4.5 billion.
Solvay is the worldÔÇÖs biggest producer of soda ash, which is used to make glass and modify acidity in shampoo. Much of its business comes from the automotive and construction industries which have been hit hard by the global recession. Its pharmaceutical products include hypertension, hormone replacement and neurological treatments.
The Solvay deal is the latest in a series for Abbott. Earlier this year, Abbott purchased US-based eye care firms Advanced Medical Optics for $2.8 billion and Visiogen for $400 million. It also acquired the nutrition unit of Indian-based Wockhardt for $130 million and US-based cardiovascular technology firm Evalve for $410 million.
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