Will Lonza's $460m Patheon offer trigger bidding war?
Lonza's bid, reported by Outsourcing-pharma on Friday, betters the unsolicited $2 per share offer tabled by JLL in March and is a “more attractive alternative,” according to Paul Currie, chair of Patheon’s special committee of independent directors.
Currie said that: “The Lonza’s proposal would provide an excellent opportunity to secure the successful future development of Patheon,” and added that further exploration of the offer would be in the best interest of shareholders.
While Patheon’s positive response will be welcomed by Lonza, the likelihood is that the Swiss firm will have a fight on its hands given that JLL holds a 57 per cent stake in the contract manufacturing organisation (CMO) and has repeatedly sought to take control of the firm.
Nevertheless Lonza’s CEO Stefan Borgas remained fairly positive about his firm’s prospects, stressing the deal would boost “manufacturing capacity across the complete supply chain” and adding that “we are rather determined to enter this space.”
He explained that: “An acquisition of Patheon would take us into the complementary activities of finished dosage development and manufacturing for both small molecules and biological active ingredients.”
Borgas did temper his enthusiasm for Patheon, describing the firm as “one of the opportunities, but it’s not the only one,” echoing comments made in July about a number of possible acquisitions the firm is considering.
Potential bidding war?
In a note to investors Commerzbank analyst Dominik Frauendienst said the Patheon acquisition would fit with Lonza’s efforts to expand its life science business, although he did say that there is a risk of a bidding war with JLL.
Versant analyst Douglas Loe also suggested that JLL will react to the Lonza bid, telling the Business News Network that the US group could “respond with an offer above $3.55 [per share].”
Other observers suggested the Patheon takeover deal could be a challenge for Lonza for different reasons.
Vontobel analyst Carla Baenziger told Reuters that while it makes sense “[the takeover] will be dilutive in the beginning and can only become accretive if Lonza can achieve an operational turnaround."
JLL has not yet issued a statement in response to the Lonza bid.
