Bayer bids £1.4bn for Norwegian cancer treatment partner Algeta

City A.M. Reporter
BAYER has offered to pay £1.4bn for Norway’s Algeta, its partner for a new prostate cancer treatment, at a 27 per cent premium to the stock’s last close, Algeta said yesterday.

The deal would boost Bayer’s drugs division by giving it outright control over Xofigo, a drug the two have developed jointly since 2009 and started selling in the United States this year.

Investors, however, bet that the German drugs and chemicals group has a fight on its hands and Algeta’s chief financial officer Oystein Soug said that rival bids could not be ruled out at this stage.

Algeta shares jumped by a third in early trade to a record 349.7 Norwegian crowns, well above Bayer’s bid of 336 crowns.

The Norwegian company said it was in early discussions that might or might not lead to a transaction. A Bayer spokesman confirmed it had made an offer but said it did not want to provide details at this point.

The decision to go public with the preliminary offer followed a leak in the German media overnight. Soug declined to comment on the level of the bid, saying that his company is under no pressure to do a deal.

“I think this company has great prospects on a standalone basis,” he said yesterday.

Asked if another company might be in a position to counter Bayer’s offer, he said: “I would not exclude that opportunity, but of course that is not my call.”

Under the current deal between the companies, Bayer is responsible for developing the drug, applying for health authority approvals and commercialising.

Bayer and Algeta share profits equally in the United States and Bayer pays royalties to Algeta on sales elsewhere.

Algeta shares have soared this year on the early success of the drug and the offer price is around 125 per cent above the stock’s level 12 months ago.