U.S. drugmaker Abbott Laboratories
The all-cash acquisition, which would be Abbott's third significant deal this month and fifth this year, aims to bolster the healthcare company's flagging prescription drug business by giving it a number of new medicines in late-stages of testing, including treatments for Parkinson's disease and other neurological conditions.
Buying Brussels-based Solvay's drugs unit would be Abbott's second-biggest deal ever, just behind its $6.9 billion deal in 2000 to buy Knoll Pharmaceuticals. The deal also gives Abbott an entrance into the fast-growing business of vaccines.
Abbott has no vaccines and this is a growing global market, so this is definitely an element that is attracting Abbott, said one of the sources, noting that Solvay's relatively small vaccines business is focused on influenza.
Solvay spokesman Erik De Leye declined to comment on a possible deal but said the company would issue a statement and hold a press conference on Monday to discuss the outcome of a recent strategic review.
A spokesman for Abbott, based in a suburb of Chicago, said the company can not comment on rumors.
The deal, which is seen closing in early 2010, would also broaden Abbott's current presence in emerging markets, a mushrooming focus for healthcare companies that can no longer count on sizzling revenue growth from the mature U.S. market.
In addition to the 4.5 billion euros, Solvay could receive as much as another 300 million euros ($441.3 million) in milestone payments between 2011 and 2013, one source said. Including milestone payments and liabilities, the deal is worth $7.6 billion (5.2 billion euros), the other source said.
Abbott and Solvay already co-market cholesterol treatments Tricor and TriLipix, which control blood fats called triglycerides. Abbott reported second-quarter combined sales of $336 million for the products.
Abbott's profit fell in the second quarter, as generic competition for its Depakote anti-seizure drug overshadowed demand for its $5 billion a year Humira arthritis drug and its Xience heart stent. Pharmaceutical sales fell 4.3 percent to $3.95 billion, in contrast to a good showing for its nutritionals products and its heart devices including Xience.
If consummated, this deal would lower Abbott's dependence on its lead-drug Humira, Wells Fargo analyst Larry Biegelsen said last week.
Biegelson said Abbott would gain nine Solvay products now in late-stage trials. But the analyst cited concerns that Teva Pharmaceutical Industries Ltd
Abbott, which has annual pharmaceutical sales of about $17 billion, would take ownership of Solvay drugs, now capturing about $3.8 billion a year.
Abbott has said it aims to pursue small and mid-sized deals to further diversify itself and broaden its global reach.
It and larger rival Johnson & Johnson
In back-to-back deals earlier this month Abbott agreed to pay $410 million for the 90 percent of Evalve Inc it does not already own, and $400 million for privately held Visiogen Inc.
Evalve's technology is used to repair mitral valves of the heart, while Visiogen makes intra-ocular lenses for patients undergoing cataract surgery.
During the summer, Abbott said it planned to widen its array of nutritional brands in India by paying $130 million for the nutrition businesses of Wockhardt Ltd
Abbott's biggest deal so far this year was the $1.4 billion purchase of Advanced Medical Optics (AMO), announced in January, which made it the leader in Lasik laser vision surgery and the second-biggest player in cataract surgery lenses.
Solvay, whose other business focus is chemicals, said earlier this month that its Dutch cell-based flu vaccine production facility -- which can produce seasonal and pandemic influenza vaccines -- had been validated following a final inspection by Dutch authorities.
(Additional reporting by Aaron Gray-Block; Editing by Diane Craft)