The DAX group Sartorius wants to buy the French company Polyplus for around 2.4 billion euros via its subsidiary Sartorius Stedim Biotech, as Sartorius announced on Friday in Goettingen. Polyplus was previously owned by private investors. For Sartorius, it is the largest acquisition in the company’s history.
According to the announcement, the parent company Sartorius will receive a bridge loan from the US investment bank JPMorgan for a transitional phase to finance the transaction. The funds are passed on to the daughter. The plan was to refinance this loan through long-term financial instruments, it said. This could also include an equity component at Stedim level, the company said on request. There was no information about the possible timetable.
A possible capital increase threatens to dilute the profit accruing to the shareholders. However, the financing of such large takeovers through a capital increase is not unusual. If management’s growth calculus works, the share dilution could more than make up for it over the long term. The chances of this are good, because Sartorius is targeting a growing segment with its takeover. Cell and gene therapies are increasingly being used in the fight against cancer and rare diseases, and are seen as a beacon of hope for many patients. Experts see a lot of potential here in the coming years and decades. In addition, Polyplus is a leader in its field, said a Sartorius spokesman.
According to the information, the French company is growing strongly. Sales in the upper double-digit million euro range are expected for 2023 and a “very high” profit margin before interest, taxes, depreciation and amortization (Ebitda).
Polyplus, based in Strasbourg, recently employed around 270 people and, in addition to France, has locations in Belgium, the USA and China. It develops and produces important DNA and RNA components for the production of viral vectors, which in turn are used in cell and gene therapies as well as other new medical therapy methods.
“Polyplus’ innovative solutions are highly complementary to our portfolio, particularly with regard to our range of cell culture media and critical components for the development and manufacture of novel therapies,” said Sartorius.
The DAX group takes over the French company from private investors, which include the investment companies Archimed and WP GG Holdings IV BV from Warburg Pincus. As usual, the takeover is still subject to approval by the regulatory authorities. Subject to their approval, Sartorius aims to complete the acquisition in the third quarter.
This is how the Sartorius share reacts
Sartorius investors initially did not like the announced takeover of the French company Polyplus on Friday because of a possible capital increase associated with it. In the early afternoon, the laboratory equipment supplier’s preferred shares listed on the DAX lost almost six percent to 385.30 euros. This made them last in the leading German index DAX. Over the course of the year they had reached a low of EUR 377.30 since January 10th.
A purchase price of around EUR 2.4 billion was agreed for the French supplier of technologies for cell and gene therapies. The takeover will be managed by the likewise listed subsidiary Sartorius Stedim. Their course dropped a little more in Paris by 6.7 percent. At times they reached their lowest level since June 2022.
The multi-billion dollar acquisition could also come with a capital raise that could dilute the profit going to shareholders. According to the announcement, the parent company Sartorius will receive a bridge loan from JPMorgan for a transitional period to finance the transaction. It is planned to refinance this loan with long-term financial instruments. This could also include an equity component at the Stedim level, the company said on request.
Financing such large takeovers through a capital increase is not unusual. If management’s calculations work out, the share dilution could more than make up for it over the long term. Analyst Richard Vosser from the US bank JPMorgan dampened hope in an initial reaction: the purchase is positive for the shares and strategically it makes sense. But it will probably take a long time before the positive influences become noticeable.
Viewed over the longer term, the Sartorius share price, currently at EUR 386, is in the middle of its range since the outbreak of the corona virus. In March 2020, the price was still at a low of EUR 164.20, but after that the share only knew the way up until the end of 2021. At that time, a peak of EUR 631.60 was paid. In 2022, however, a correction set in, which bottomed out at around 300 euros last summer. In 2023, the share will still be slightly up.
GOETTINGEN (dpa-AFX)
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