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

Arts and Entertainment
The eyes have it: Kate Bush
music
Arts and Entertainment
booksNovelist takes aim at Orwell's rules for writing plain English
Arts and Entertainment
Al Pacino in ‘The Humbling’, as an ageing actor
filmHam among the brilliance as actor premieres two films at festival
News
Fifi Trixibelle Geldof with her mother, Paula Yates, in 1985
people
PROMOTED VIDEO
Sport
Mario Balotelli in action during his Liverpool debut
football ...but he can't get on the scoresheet in impressive debut
Environment
Pigeons have been found with traces of cocaine and painkillers in their system
environmentCan species be 'de-extincted'?
Arts and Entertainment
booksExclusive extract from Howard Jacobson’s acclaimed new novel
News
i100
Arts and Entertainment
A Pilgrim’s Progress is described by its publisher as “the one-and-only definitive record” of David Hockney's life and works
people
Sport
Loic Remy signs for Chelsea
footballBlues wrap up deal on the eve of the transfer window
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
i100
Arts and Entertainment
Art
Arts and Entertainment
Elizabeth McGovern as Cora, Countess of Grantham and Richard E Grant as Simon Bricker
TV
Life and Style
Instagram daredevils get thousands of followers
techMeet the daredevil photographers redefining urban exploration with death-defying stunts
Arts and Entertainment
Diana Beard, nicknamed by the press as 'Dirty Diana'
TVDaughter says contestant was manipulated 'to boost ratings'
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

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

C# .NET Developer (PHP, Ruby, Open Source, Blogs)

£40000 - £70000 per annum + Bonus+Benefits+Package: Harrington Starr: C# .NET ...

Data Analyst/Developer (Good education, Data mining, modelling,

£40000 - £70000 per annum + benefits+bonus+package: Harrington Starr: Data Ana...

Law Costs

Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...

Day In a Page

Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Fashion walks away from the celebrity runway show

Fashion walks away from the celebrity runway show

As the collections start, fashion editor Alexander Fury finds video and the internet are proving more attractive
Meet the stars of TV's Wolf Hall... and it's not the cast of the Tudor trilogy

Meet the stars of TV's Wolf Hall...

... and it's not the cast of the Tudor trilogy
Weekend at the Asylum: Europe's biggest steampunk convention heads to Lincoln

Europe's biggest steampunk convention

Jake Wallis Simons discovers how Victorian ray guns and the martial art of biscuit dunking are precisely what the 21st century needs
Don't swallow the tripe – a user's guide to weasel words

Don't swallow the tripe – a user's guide to weasel words

Lying is dangerous and unnecessary. A new book explains the strategies needed to avoid it. John Rentoul on the art of 'uncommunication'
Daddy, who was Richard Attenborough? Was the beloved thespian the last of the cross-generation stars?

Daddy, who was Richard Attenborough?

The atomisation of culture means that few of those we regard as stars are universally loved any more, says DJ Taylor