Abbott to Buy Chile's CFR Pharmaceuticals for $2.9 Billion (1)
Bloomberg News
, the largest maker of heart stents and adult nutritional beverages, joined the dealmaking sweeping the health-care industry with a $2.9 billion agreement to acquire Chile's CFR Pharmaceuticals SA. (CFR)
Abbott will buy the holding company that indirectly owns 73 percent of CFR and conduct a cash tender offer for the remaining shares outstanding, the Abbott Park, Illinois-based company said in a statement. The equity value of the deal is about 53 percent more than CFR's market value of 1.05 billion Chilean pesos ($1.89 billion). the offer is about 35 cents a share, the companies said.
The deal will more than double Abbott's pharmaceutical sales in the $73 billion Latin American industry, where it markets brand name versions of drugs that have lost patent protection, the company said. Santiago-based CFR sells a range of products for women's health, heart and respiratory diseases in 15 markets across the region.
'This enhances the fast-growth part of their business' by focusing on emerging markets, said Glenn Novarro, an analyst with RBC Capital Markets, said in a telephone interview from New York. The purchase also will increases Abbott's drugs business, which has lagged behind the nutritional and diagnostic areas, he said.
Deals Frenzy
About $118 billion of health-care mergers and acquisitions were announced or proposed last month, a record, according to data compiled by Bloomberg that dates back to 2002. It's almost as much as the $174 billion that was earmarked for health-care deals for all of last year, the data show.
The deal comes as drug companies face slowing sales growth in the U.S. and Europe, triggered by the loss of patent protection for their biggest selling drugs. The market in Latin America is growing two to three times faster, surging to $124 billion by 2018, according to the research firm IMS Health Inc.
Abbott said it will also assume CFR's net debt of about $430 million under the agreement.
CFR, Chile's biggest drugmaker, sold shares to the public in 2011, raising $370 million to bolster expansion efforts in drug development and distribution. The company called off a $1.2 billion offer to buy South Africa's Adcock Ingram Holdings (AIP) Ltd. in February after failing to win enough support from shareholders.
Ukrainian Immigrants
CFR's controlling family are descendants of Nicolas Weinstein, the son of Ukrainian immigrants, who founded a pharmacy in the center of Santiago called 'Botica Italiana' in 1922 to sell imported medicines as well as producing its own. The company got an early boost from the sale of its ibuprofen-based brand Aliviol to Bayer AG.
The three controllers are Alejandro Weinstein Crenovich, CFR's chairman, Alejandro Weinstein Manieu, its chief executive officer, and Nicolas Weinstein Manieu who sits on the board. Weinstein Crenovich, the chairman, is the son of the founder. The other two are Weinstein Crenovich's sons.
Colombia is CFR's largest market, accounting for 30 percent of revenue, followed by Chile with 21 percent and Peru with 16 percent.
Abbott's biggest acquisition came in 2000, when it purchased BASF SE's pharmaceutical business for $7 billion. Last year it bought Idev Technologies Inc. and OptiMedica Corp., for a combined $560 million. Abbott's former drug business was split off into North Chicago, Illinois-based AbbVie Inc. in January 2013, while Abbott retained the original company's medical devices, nutritional products, diagnostic tests and generic drugs.
Abbott shares fell 1.7 percent to $39.24 yesterday in New York. The shares have gained 4.2 percent in the past twelve months.
To contact the reporters on this story: Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net; Eduardo Thomson in Santiago at ethomson1@bloomberg.net
To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net; Sebastian Boyd at sboyd9@bloomberg.net Bruce Rule
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