Warner Chilcott Said to Consider Options After Interest
Stock Chart for Warner Chilcott PLC (WCRX)
Warner Chilcott Plc (WCRX) is weighing options including a possible sale after receiving interest from strategic and private-equity buyers, according to people with knowledge of the matter. The shares jumped in early trading.
Goldman Sachs Group Inc. (GS) is helping the drugmaker assess interest, said the people, who declined to be identified because the discussions are private. Warner Chilcott is also considering paying a dividend as an alternative to a sale, one person said.
Warner Chilcott climbed 18 percent to $22.10 at 8:17 a.m. On April 27, the stock rose 8 percent on takeover speculation by investors, giving the company a market capitalization of $4.69 billion. The Dublin-based drugmaker focuses on women’s health care, dermatology, urology and gastroenterology. It has an enterprise value, a figure that includes net debt, of $7.93 billion, according to data compiled by Bloomberg.
A “takeout represents an ideal exit for Warner Chilcott,” said Irina Rivkind, an analyst with Cantor Fitzgerald in New York. In a note to clients, she said a sale might help overcome issues the company has with a government investigation of its marketing practices; production problems in Puerto Rico; and products losing exclusivity.
A Warner Chilcott spokeswoman didn’t respond to a call outside of regular work hours. A spokesman for Goldman Sachs declined to comment.
A group including Thomas H. Lee Partners LP, Bain Capital LLC, and the buyout units of JPMorgan Chase & Co. (JPM) and Credit Suisse Group AG (CSGN) took Warner Chilcott private in 2005 and brought it public again in 2006. Credit Suisse sold its stake in 2010. After the company’s most recent secondary stock offering, last year, the remaining buyout firms together owned about 30 percent of the stock, Warner Chilcott said in a regulatory filing in February.
The shares have dropped 21 percent during the past 12 months. Warner Chilcott has traded at a lower valuation than similar drugmakers, largely because of concern about looming competition from generic copies of its products, said Gary Nachman, a Susquehanna Financial Group analyst in New York, in an April 23 research note.
Nachman said company management told him they were exploring “numerous opportunities” and “casting a relatively wide net over what could make sense for the company.” Warner Chilcott’s size and debt levels make a leveraged buyout by private equity less likely, he said.
Warner Chilcott had $2.7 billion in revenue last year, with sales led by osteoporosis treatment Actonel, Asacol for ulcerative colitis and Loestrin 24 FE, a low-dose birth-control pill. Sales may fall for the second straight year to $2.54 billion this year, according to the average estimate of 19 analysts compiled by Bloomberg. The company is scheduled to report its first-quarter financial results on May 4.
Bayer AG, the Leverkusen, Germany-based drugmaker, could be an ideal buyer of Warner Chilcott, said Cantor Fitzgerald’s Rivkind. The company’s women’s health portfolio has sales of about $1.5 billion, an Asacol, a drug for ulcerative colitis, sold $743 million last year. “Both of these products could fit in nicely with Bayer’s primary care franchise,” Rivkind said.
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