CVC Capital Partners Plc is exploring strategic options that could include asset disposals for Recordati SpA if its proposed €10.9 billion takeover of the Italian pharmaceutical company completes, according to a report.
Among the alternatives under consideration is a potential sale of Recordati's rare-diseases unit. The firm may also examine the sale of other parts of the drugmaker's portfolio as it assesses how best to position the business should it take control.
Recordati disclosed that it had received a takeover approach valuing the company at €52 per share, including dividend. That figure equals a 12% premium to Recordati's closing price on the Wednesday prior to the announcement. The approach came from the company's largest shareholder.
CVC is pursuing a route that would take Recordati private, after having earlier investigated divesting its stake in the company. Sources described the plans as preliminary, and indicated that details remain subject to change as deliberations continue.
The rationale behind potential divestments is to provide the private equity owner with greater latitude to reconfigure the business following a delisting. In particular, selling a division such as the rare-diseases arm could be a mechanism to unlock value, given that the unit is developing treatments for low-incidence conditions including Cushing's syndrome and hyperammonemia, which are described as higher-margin therapies.
CVC's influence over Recordati stretches back to 2018, when the firm acquired the founding family's holding company. That move has effectively allowed the private equity owner to help steer the drugmaker's trajectory over the past several years.
Background
The takeover approach values Recordati at €52 a share including dividend and was communicated by the company's largest shareholder. It represents a 12% uplift from the stock's most recent closing price before the approach was announced. CVC's objective is to complete a take-private transaction, having previously explored selling its existing stake.
Potential strategic logic
Potential asset sales following a successful acquisition would give CVC scope to reallocate capital and crystallize value from specific divisions. The rare-diseases arm was singled out because it focuses on treatments for rare conditions and is associated with higher-margin products such as therapies for Cushing's syndrome and hyperammonemia.
Current status
Considerations are at an early stage and may evolve. No definitive decisions have been reported, and any eventual plan would depend on outcomes of the takeover process and further internal deliberations.
Key points
- CVC has made a bid valuing Recordati at €10.9 billion, equivalent to €52 per share including dividend, a 12% premium to the recent close.
- Possible divestments under review include Recordati's rare-diseases division, which develops treatments for conditions such as Cushing's syndrome and hyperammonemia.
- Sectors impacted include pharmaceuticals and private equity activity in healthcare, along with capital markets that will respond to any major corporate restructuring.
Risks and uncertainties
- Deal terms and strategic plans are preliminary and may change, creating uncertainty for shareholders and potential buyers in the pharmaceutical sector.
- Any divestment of high-margin specialty units could alter Recordati's future earnings mix and investor perception of the company's long-term growth profile within healthcare markets.
- Market reaction to a take-private move and subsequent asset sales is uncertain, affecting equity liquidity and valuations in the pharmaceutical segment.
Conclusion
CVC's approach signals an intent to explore how best to extract and create value from Recordati if the take-private bid advances. The firm is considering various structural options, up to and including sales of individual assets, but all plans remain subject to change as discussions progress.