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

ebookA unique anthology of reporting and analysis of a crucial period of history
Ray Whelan was arrested earlier this week
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Wayne’s estate faces a claim for alleged copyright breaches
peopleJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Account Management Strategy Manager

£38000 - £42000 per annum + competitive: Real Staffing: Required skills:Previo...

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice