Japan's Takeda Pharmaceutical Co <4502.T> is in talks to buy privately-held Swiss rival Nycomed in a deal that could be valued at more than $14.2 billion, Bloomberg News said, citing two people with knowledge of the matter.
This would give Japan's Takeda a much needed boost to its presence in Europe and emerging markets such as Russia and the former Soviet Union.
The scale of this buyout is really large. We still don't know the exact details of the deal and the company (Nycomed), but Takeda has carried out this kind of strategy for a long time, said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
Sources confirmed to Reuters that Takeda was in talks to buy Nycomed and it had hired Deutsche Securities
Takeda declined to comment on the report. It has previously said it would be willing to take on debt for future deals.
Bloomberg News reported that negotiations are at an advanced stage and a deal could be announced as early as next week. No agreement has been reached yet and the talks could still fall apart, the news agency said.
Japanese drugmakers, including Daiichi Sankyo <4568.T> and Astellas Pharma <4503.T>, have been actively pursuing acquisitions to boost growth as they face the loss of patent protection on key medicine.
Nycomed's purchase would be a second major deal for Takeda after it bought U.S. cancer drug specialist Millennium Pharmaceuticals in 2008 for about $9 billion.
A $14 billion purchase would be the second-biggest takeover by a Japanese firm after Japan Tobacco's <2914.T> $19 billion purchase of British rival Gallagher, according to Thomson Reuters data.
Takeda's shares shed 0.4 percent by 0440 GMT in a Nikkei benchmark index <.N225> down 0.8 percent.
Nycomed's top product is Pantoprazole for heartburn, a field that Takeda knows well with its own Prevacid, a former blockbuster heartburn drug that has now lost patent protection.
The mid-sized pharmaceutical firm also boasts lung drug roflumilast, known as Daxas in Europe and as Daliresp in the U.S. It is the first drug in a new class of treatment for chronic obstructive pulmonary disease, a common and deadly disorder which causes breathing difficulties and is often caused by cigarette smoking.
It won approval in the United States in March, following earlier delays, where Forest Laboratories
Nycomed has been the subject of much speculation about a sale or an IPO, with the Wall Street Journal reporting in 2009 that the drugmaker had hired Goldman Sachs to explore a possible sale of the company, a deal that was said at the time to be worth as much as 10 billion euros.
Chief Executive Hakan Bjorklund told Reuters earlier this year that an IPO this year was highly unlikely.
Nycomed, which has 12,500 employees, is majority owned by four private equity firms, led by Nordic Capital with a 41 percent. The other three are Credit Suisse's
Last year, Nycomed bought a majority stake in a Chinese pharmaceutical company, underscoring its focus on emerging markets and Western manufacturers' hunger to boost their presence in the country.
It paid around $210 million for the 51.3 percent stake in Guangdong Techpool Bio-Pharma.
(Writing by Edwina Gibbs; Additional reporting by James Topham, Junko Fujita and Antoni Slodkowski in TOKYO and Renju Jose in BANGALORE; Editing by Anshuman Daga)