Roche's pounds 7bn takeover deal surprises drugs industry

The drugs industry was yesterday rocked by another large takeover, as Swiss giant Roche unveiled an $11bn (pounds 7bn) deal to buy a privately owned German diagnostics group, Boehringer Mannheim.

Though a deal from Roche had long been awaited, the acquisition surprised analysts who had expected the group to snap up a pure pharmaceuticals company. Shares in Zeneca, the UK drugs business which was regarded as an obvious bid target for Roche, are likely to drop today on the news. Birgit Kulhoff, European pharmaceuticals analyst at UBS, said: "Roche can still afford to make other acquisitions, but this rules out anything major like Zeneca."

The deal is the latest example of consolidation among international pharmaceutical companies looking for ways to boost their growth. The most recent mergers include last year's huge link-up between Swiss groups Sandoz and Ciba, and in 1995 Hoechst's acquisition of the US's Marion Merrill Dow, the merger of Pharmacia and Upjohn and Glaxo's takeover of Wellcome.

Fritz Gerber, chairman of Roche, said that the agreed acquisition of Boehringer, which is owned by Corange, a family-run holding company based in Bermuda, would make the combined group a market leader in diagnostics. Its activities include clinical laboratories and Aids testing.

"This acquisition enables Roche to attain yet another of its strategic goals," he said.

Roche said it could not give details of job losses, but thought that estimates of 10 per cent of the combined workforce looked too high. Roche employs 50,000 people and Boehringer 18,000. Roche said the deal, which has yet to be assessed by the regulators, may not be approved before the year end.