Several bidders line up for Germany's Ratiopharm

There now seems to be positive action in the takeover of German generic drugmaker Ratiopharm GmbH, which was put up for sale after the suicide of its principal, Adolf Merckle, in January. He had amassed substantial debts, reported to have been around $6.8 billion, ahead of his action. The firm has attracted at least 10 first-round bids, several people familiar with the procedure told Reuters yesterday, indicating a competitive auction was underway, although the price tag looks a lot lower than the $4.5 billion originally sought by Ratiopharm's owners.

The German billionaire entrepreneur, who owned Ratiopharm and Germany's biggest drug wholesaler Phoenix Pharmahandel, had offered his drug empire as collateral on a loan extension from 40 banks that he is unable to repay on time due to the world financial crisis (The Pharma Letter January 12).

Ratiopharm drew bids of about 2 billion euros ($3 billion) from companies including TPG, Goldman Sachs and Advent International Corp, two people close to the matter said. Goldman's private-equity arm and Boston-based buyout firm Advent bid jointly, said the people, who declined to be identified because talks are private, reported Bloomberg. Other bidders include New York-based KKR & Co and French drugmaker Sanofi-Aventis, they said. Generic drugmakers such as Israel's Teva Pharmaceutical Industries, the USA's Mylan and Actavis Group of Iceland, as well as Chinese drugmaker Sinopharm and private equity firm Permira are also among the bidders, the sources indicated.

The Merckle family may struggle to raise as much as 3 billion euros because a decline in Ratiopharm's home market, where the company competes with Stada Arzneimittel and Novartis' Sandoz unit, has reduced the value of the company's two German brands, people familiar with the plan said in September. The Merckle family is also seeking buyers for drug wholesaler Phoenix Group and Swiss generic drugmaker Mepha Group to help pay off debt, according to various media reports.

According to the UK's Financial Times, VEM Vermogensverwaltung, the company's largest investor, indicated in an interview with the newspaper the previous week that it was surprised by the number of indicative bids submitted at that time, saying that it was 'satisfied,' with the offers, but declined to comment on the latest developments, as did other presumed bidders.