Roche in Talks to Buy Chugai in $10 Billion Deal

Roche Holding AG (ROG) is in talks to buy the almost 40 percent of Chugai Pharmaceutical Co. (4519) that it doesn’t already own to gain full control of its Japanese partner for oncology and arthritis drugs, according to people familiar with the matter.

Roche, the world’s biggest maker of cancer drugs, plans to pay about $10 billion to buy the remaining stake in Tokyo-based Chugai, the people said, asking not to be identified because the plans are private. The deal may be announced as early as this week, though no final decision has been made, one of the people said.

Chugai today said it is not currently in talks with Roche. A company statement said the company is “in no way in the process of reviewing any plan to become a wholly owned subsidiary of Roche.”

Shares of Roche declined about 1 percent in Swiss trading on Aug. 15. Chugai, which seldom trades outside of Japan, rose as high as 29.70 euros in Frankfurt. Before that, the last time it had traded was Aug. 13 at 23.81 euros.

Chugai’s shares in Japan have climbed 43 percent this year and ended trading ahead of the news of Roche’s interest at 3,315 yen, or about 24.17 euros, valuing the whole company at about $18 billion.

Representatives for Basel, Switzerland-based Roche declined to comment.

Photographer: Patrick T. Fallon/Bloomberg

Osamu Nagayama, chairman and chief executive officer of Chugai Pharmaceutical Co. Close

Osamu Nagayama, chairman and chief executive officer of Chugai Pharmaceutical Co.

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Photographer: Patrick T. Fallon/Bloomberg

Osamu Nagayama, chairman and chief executive officer of Chugai Pharmaceutical Co.

Roche owned 62 percent of Chugai as of June 30, 2014, according to the Swiss company’s annual report. The drugmakers sell the Avastin, Herceptin and Tarceva tumor treatments and developed the Actemra arthritis medicine together.

Last month, Roche agreed to buy Seragon Pharmaceuticals Inc. for as much as $1.7 billion to gain a new generation of experimental treatments for breast tumors. The company is still seeking “targeted” acquisitions amid a pharmaceutical and biotechnology deals environment in which valuations are high, Chief Executive Officer Severin Schwan said on July 24.

To contact the reporters on this story: Manuel Baigorri in London at mbaigorri@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Matthew Campbell in London at mcampbell39@bloomberg.net

To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net; Elizabeth Fournier at efournier5@bloomberg.net; Kristen Hallam at khallam@bloomberg.net Elizabeth Fournier

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