>>> Germany's Stada surges on Teva bid speculation
Fri Aug 15, 2008 5:50am EDT
By Mantik Kusjanto
FRANKFURT, Aug 15 (Reuters) - Shares in Stada (STAGn.DE: Quote, Profile, Research, Stock Buzz) surged as much as 13 percent on Friday on renewed speculation that Germany's third-largest generics drugmaker, worth around 2 billion euros ($3 billion), could be taken over.
Globes, the website of Israel's biggest business daily, cited unidentified sources as saying that Teva Pharmaceutical Industries (TEVA.O: Quote, Profile, Research, Stock Buzz)(TEVA.TA: Quote, Profile, Research, Stock Buzz) was in talks to buy Stada. Teva declined to comment on the rumours.
Stada, which makes copies of AstraZeneca's (AZN.L: Quote, Profile, Research, Stock Buzz) Prilosec anti-ulcerant and Merck & Co's (MRK.N: Quote, Profile, Research, Stock Buzz) Zocor cholesterol drug among other popular off-patent medicines, declined to comment.
Teva, with a market value of around $39 billion, is already buying rival Barr Pharmaceuticals (BRL.N: Quote, Profile, Research, Stock Buzz) for $7.46 billion.
"The acquisition of Stada would make sense for Teva (which is) willing to expand in Europe. Should Teva come up with a price offer, we don't see it below 40 euros per share," said Martin Possienke, an analyst at Equinet.
Stada shares were up 11.8 percent at 35.94 euros at 0900 GMT, compared with a 0.8 percent increase in the German midcap MDAX index. The stock has 100 percent free float.
According to Reuters Estimates, Stada trades at 12.3 times next year's estimated earnings, while Teva is at 15.6 times
Stada shares have lost almost a third of their value this month following a profit warning for this year, due partly to rising competition. The profit margin in its key generics business dropped sharply in the second quarter.
The company, a perennial takeover candidate, said this week it planned to cut costs to improve profitability and also aimed to make acquisitions to expand.
The generics industry is seeing a wave of consolidation as players seek increased economies of scale and geographic reach. Teva, the world's largest generics drugmaker, has been keen to gain a foothold in Germany, the world's second-largest market for generic drugs, where competition is rising.
The Israeli company, little known in Germany, secured a crucial platform to tap the market after German top state health insurer, Allgemeine Ortskrankenkasse (AOK), last year started to secure drug supplies for its clients via tenders.
Analysts said the move will reshape the German generic drugs market, which according to industry tracker IMS is worth about 8 billion euros a year. (Editing by Paul Bolding and Victoria Bryan) <<<
