Sanofi prefers not to overpay for an acquisition. The French pharmaceutical group announced Sunday evening, December 11th, that it would not acquire the Irish biotech company Horizon Therapeutics. Two weeks ago, Sanofi made public its interest in the company, while taking care to indicate that there was no certainty about the conclusion of a transaction.
This Monday, December 12th, the CAC 40 shareholder explained that “expectations regarding the transaction price did not meet [its] value creation criteria”. In other words, Horizons Therapeutics’ management was too greedy in the eyes of Sanofi. “Sanofi announces that it is no longer in discussions with Horizon and that it does not intend to make an offer for Horizon,” the company added.
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The French company Sanofi was not the only one in the running
Horizon Therapeutics had indicated at the end of November that it was in discussions with Sanofi, but also with the American company Amgen and the Belgian company Janssen, affiliated with Johnson & Johnson. Janssen had quickly declared that it did not intend to make an offer. That leaves Amgen. According to the Wall Street Journal, the American company is in advanced discussions to acquire Horizon Limited and an agreement could be announced as early as this Monday.
Horizon Therapeutics is a biotech specializing in orphan autoimmune diseases. Its lead drug, Tepezza, treats thyroid eye disease, with peak sales expected at $4.2 billion, according to an Evaluate consensus cited by Invest Securities. Its second drug, Krystexxa, in the treatment of uncontrolled gout, is expected to reach peak sales of at $1.1 billion, the research firm added. By 2021, Tepezza and Krystexxa had sales of $1.6 billion and $565 million, respectively, or nearly 70% of Horizon’s revenue.
Its acquisition would have been a big deal for Sanofi, as its market capitalization – Horizon is listed on the Nasdaq – exceeds $22 billion. According to Invest Securities, Sanofi would have made the largest acquisition in its history.
The group would certainly have had the financial means to carry out this transaction, having a solid balance sheet with a low debt ratio. But UBS felt that just because the group could afford this very large Christmas purchase, it should not necessarily take the plunge.
For the Swiss bank, buying Horizons was “questionable […] as it would add a mixed portfolio of specialty pharmaceuticals to Sanofi’s portfolio without addressing the need for a new company.
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