Drugmaker Mercury on the trail of £350m buyer

Private-equity groups Montagu and Bridgepoint are expected to be sounded out as potential buyers for a £350m drugmaking company within days.

Investment bank Jefferies is due to send out information on Mercury Pharma, a Croydon, Greater London, business that produces medicines which tackle arthritis and cardiovascular problems, this week or next. The current private-equity owner of Mercury Pharma, run by chief executive John Beighton, is Hg Capital. It only bought the company, which was then known as Goldshield, in December 2009.

However, Hg already expects to make a huge return on its investment, having bought the firm off the Stock Exchange for just £179m.

Montagu will be approached by Hg adviser Jefferies as it has made eight investments in healthcare and pharmaceuticals over the years.

The London-based buyout group has also made several high-profile investments recently, including the £200m purchase of The College of Law in April, and so is regularly being sounded out over prospective mid-market deals. Bridgepoint has also shown interest in a wide range of healthcare groups, having previously bought Stockholm-based dialysis clinic operator Diaverum and telecare group Tunstall. Neither party is certain to bid, though, and rival drugmakers are also expected to be interested in swallowing up their rival drugmaker.

Mercury has a colourful history. In 2007, the company handed over £4m to the Department of Health to settle a claim that it and others had allegedly acted as a cartel over the supply of a blood-thinning treatment.

The group did not admit liability and a related criminal case brought by the Serious Fraud office collapsed.

The expected approach to Bridgepoint would come about six months after the group agreed to buy Wiggle, an online bicyle retailer, in a deal worth £180m. Bridgepoint beat rival buyout group EQT to win that particular race.

A few weeks later, Bridgepoint announced the £175m acquisition of the Quilter wealth management business from Morgan Stanley.

Quilter looks after £7.6bn of funds for charities, trusts, pension funds and private clients.