Private equity firms' bid plans boosts Merck group shares

Mumbai: Plans by private equity firms like Carlyle Group, Bain Capital, Apax Partners and Kohlberg Kravis Roberts & Co. and Warburg Pincus to bid for the generics business of Merck KGaA has lifted shares in the German group as much as 2.4 per cent.

Merck is seeking to shed its generics business and focus on high-margin branded harmaceuticals and chemicals.to help reduce a piled up debt of $13.3 billion following its Serono acquisition.

First round non-binding offers for the business, which is expected to fetch at least €4 billion ($5.3 billion), are due in by Monday, according to people close to the sale process.

While many private equity firms are expected to be pursuing the unit, Carlyle is not currently teamed up with another private equity firm and has no formal offer on the table, sources familiar with the developments said.

Bain Capital and Apax Partners are preparing a joint bid, as are Kohlberg Kravis Roberts & Co. and Warburg Pincus, the Financial Times Deutschland reported.

Prospective industry contenders include US-based Mylan Laboratories Inc, Iceland's Actavis and Ranbaxy Laboratories Ltd. of India.

Industry sources said Israel's Teva Pharmaceutical Industries Ltd. and India's Dr. Reddy's Laboratories Ltd. are also eyeing the operation.

Reports, meanwhile, said Stada Arzneimittel AG, Germany's third-largest generic-drug maker, is considering an offer for Merck KGaA's larger generic-medicines unit.

Stada, based in Bad Vilbel, Germany, is examining the accounts of the division, the report quoted sources close to the developments said.

Merck's generics unit of Darmstadt, Germany, was the world's third largest in 2006 with sales of some 1.8 billion euros.

The expected strong line-up of both strategic and private equity bidders has fuelled speculation of a competitive auction that could result in a final price of €4-5 billion.