Private equity firms consider $25 billion bids for Novartis generics unit


Several private equity firms are considering offers of up to $25 billion for Sandoz, the generic drugs business owned by pharmaceutical company Novartis, according to several people with knowledge of the situation.

Blackstone and Carlyle were considering a potential joint bid, people familiar with their plans said, while Sweden’s EQT was considering a separate bid alongside the Struengmann family, which sold its Hexal generic drugs unit to Novartis for $7 billion. in 2005, another person said.

Novartis is considering its options to divest Sandoz, one of the world’s largest generic drug makers, either through a spin-off or a complete sale. Private equity talks were at a very early stage, a number of people said. They added that no formal offer had been made.

Any sales process should start closer to summer, said a person with knowledge of the situation.

Bloomberg first reported preliminary interest in Sandoz and that a consortium led by Advent International, Hellman & Friedman and KKR was also considering a bid.

Private equity has struggled to hit investment targets in recent years: The industry closed a record $1.1 billion in deals in 2021, according to data from PitchBook, pharma and health being among the most active.

In 2021, Blackstone, Carlyle and Hellman & Friedman led the $34 billion buyout of medical equipment supplier Medline Industries, the biggest private equity buyout of the year.

The investment accumulation comes as giants like Unilever, General Electric, IBM, Siemens and Johnson & Johnson split off to streamline their operations. With record amounts of new cash to invest and buoyant funding markets, private equity buyers have increasingly been able to raise debt and equity to buy large divisions from these conglomerates.

Novartis said late last year it had begun a strategic review of Sandoz, which could include a sale. It has also refocused on more cost-effective, lower-volume drugs in line with industry trends.

A Sandoz insider said talks about the future of the unit, which generates around a fifth of the group’s sales, had been going on for years, with possible scenarios including a listed spin-off and a mixed acquisition by investors. private equity and another large pharmaceutical group.

The company could be worth between $20 billion and $30 billion, the person said.

Novartis chief executive Vas Narasimhan said in an interview with the Financial Times last year that there had been preliminary interest from a number of investors, including private equity firms and other pharmaceutical companies.

“We collect all these [preliminary proposals] and we are evaluating them,” he said, although he noted there was no particular urgency.


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