Rhone-Poulenc makes pounds 1.7bn hostile bid for Fisons

Rhone-Poulenc Rorer, the US drugs subsidiary of the French chemicals group Rhone-Poulenc, yesterday launched a pounds 1.7bn hostile bid for Fisons, the UK pharmaceuticals group, after failing to reach an agreed deal.

The move hit the stock market out of the blue, despite the bid rumours which have swirled round Fisons for months, and the shares were sent soaring 71.5p to 264.5p - well ahead of the 240p-a-share offer terms.

It came amidst speculation on Wall Street yesterday that an pounds 8bn tie- up between the US pharmaceutical group Upjohn and Sweden's Pharmacia was in the offing.

Fisons' chief executive, Stuart Wallis, almost immediately rejected RPR's 240p-a-share offer, claiming it seriously undervalued the group. "Obviously there is a price, as there is with any company, which is right and sensible for shareholders: 240p very definitely isn't it," he said yesterday.

Some analysts said they expected a white knight rescuer to emerge, with one suggestion that an offer up to 300p might be justified. Others, however, said RPR was offering a full price and queried why another bidder would appear at this late stage of Fisons' recovery from several years of difficulties.

The bid is worth less than half the 511p Fisons' shares hit in 1991, just before the company's fall from grace, precipitated by criticisms of production arrangements by the US Food and Drug Administration, but well over double the recent low of 107p earlier this year. If the deal goes through, it will propel Rhone-Poulenc Rorer from the 14th- to the 10th- or 11th-largest drug group and put it in number four position in terms of asthma allergy products, Fisons' main area of strength.

The two sides have known each other since at least 1992, when they signed a co-promotion agreement for Fisons' Tilade and RPR's Azmacort anti-asthma drugs. Directors of the companies met three times during the past week without reaching agreement on terms, but RPR said it would continue to seek a recommendation from the Fisons' board. Michel de Rosen, the president and chief executive who was involved in the talks with Mr Wallis, said: "We believe this is a full and fair offer to shareholders which he could recommend to the board, but frankly he hasn't seen the light."

He attacked Mr Wallis's strategy of selling off Fisons' research and development operations, which went to Astra of Sweden earlier this year for pounds 202m. Mr De Rosen said this was highly risky for shareholders, leaving the group without new products for the future.

Fisons is heavily dependent on Intal, an anti-asthma drug launched in 1968, which represented pounds 205m of the group's pounds 334m turnover in asthma and allergy products last year. Sales had started to edge down after its nebulised form went off patent last year, Mr De Rosen said, while Tilade, which was meant to be Intal's replacement, had been "a significant disappointment". Sales, which were pounds 52m last year, were growing, but not at the rate hoped when some analysts had forecast they could reach $1bn.

"They have no pipeline today to offset the Intal decline and they have no pipeline in future because they have sold the R&D to Astra, " Mr De Rosen said. Meanwhile, Mr Wallis would find it more difficult than he thinks to buy in drugs or companies to occupy Fisons' marketing network. The competition for suitable products was intense, he said.

RPR, which has strengths in treatments for cardiovascular diseases, wants to build critical mass in the $9bn anti-asthma market, the fifth-biggest in the pharmaceutical area.

Mr De Rosen said growth had been around 10 to 12 per cent per annum in recent years and they were forecasting 8 per cent going forward, compared with 5 to 6 per cent for pharmaceuticals as a whole.

Fisons would bring marketing expertise in Europe, where it has an agreement to market RPR drugs, including Kestin, a new formulation about to be launched. Adding Fisons' business to RPR's Azmacort, the leading inhaled steroid for asthma in the US, would give it a full range of treatments, Mr De Rosen said, as well an interesting new technology in the new generation of dry powder inhalers.

The exit multiple on the deal is around 24 times the consensus of analysts' earnings forecasts for 1995, based on profits of around pounds 103m. But the multiple falls into the high teens when account is taken of current proposals to sell the laboratory supplies and scientific instruments businesses.

Comment, page 17

PROMOTED VIDEO
News
REX/Eye Candy
science
News
A photo of Charles Belk being detained by police on Friday 22 August
news
News
i100
Sport
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
Extras
indybest
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
Google Doodle celebrates the 200th birthday of Irish writer Sheridan Le Fanu
tech
Arts and Entertainment
Vinyl demand: a factory making the old-style discs
musicManufacturers are struggling to keep up with the resurgence in vinyl
News
i100
News
In Eternal Sunshine of the Spotless Mind Jim Carrey and Kate Winslett medically erase each other from their memories
scienceTechnique successfully used to ‘reverse’ bad memories in rodents could be used on trauma victims
Arts and Entertainment
Singer Pixie Lott will take part in Strictly Come Dancing 2014, the BBC has confirmed
tv
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

Trade Desk FIX Analyst - (FIX, SQL, Equities, Support)

£50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...

Day In a Page

Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?