Galderma Agrees to Buy Q-Med to Gain Wrinkle Smoother Restylane

Galderma Agrees to Buy Q-Med to Gain Wrinkle Smoother
Q-Med AB's headquarters in Uppsala, Sweden. Source: Q-Med AB via Bloomberg

Galderma SA, the Swiss maker of Cetaphil skin creams, agreed to buy Sweden’s Q-Med AB for as much as 7.45 billion kronor ($1.08 billion) to add products that smooth wrinkles and enhance breasts.

Q-Med shareholders other than founder and Chairman Bengt Aagerup will receive 75 kronor a share in cash, the Swedish company said in a statement today. That’s 13 percent more than the stock’s Dec. 10 closing price of 66.25 kronor. The stock rose as much as 15 percent, the most in 19 months, after the announcement. Galderma, founded in 1981, is owned by L’Oreal SA and Nestle SA.

The purchase will add to Lausanne, Switzerland-based Galderma’s roster of cosmetic treatments. Q-Med’s Restylane injection can be used separately or in combination with Allergan Inc.’s Botox wrinkle smoother. The Swedish company also makes Macrolane, a gel that’s injected to give breasts volume.

“The deal makes sense for both L’Oreal and Nestle as they will benefit from cooperation in developing skin-care products and even value-added nutrition,” said Barbara Ambrus, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, Germany.

Aagerup’s Lyftet Holding BV, which owns 47.5 percent of Q-Med, has committed to accept the offer in return for 58.94 kronor a share in cash, according to the statement. The founder may receive additional cash payments if financial and business goals are met, for a total price of 74.96 kronor a share, the company said.

Public Offer

Nestle and L’Oreal will each provide half of the funds used to finance the transaction, Galderma said in a separate statement. The amount won’t require a major charge for Nestle, said Ambrus, who said she expects the company to spend about 5 billion Swiss francs ($5.1 billion) on investments this year.

Galderma will make a public offer for Q-Med shares from about Jan. 4 to Jan. 25, Q-Med said. The Swedish company’s board unanimously recommended that shareholders accept the offer. Aagerup hasn’t participated in the board’s dealings over the offer from Galderma, Q-Med said. The offer is conditional on approval from Medicis Pharmaceutical Corp., a business partner of Q-Med’s, the company said.

“It is important from an industrial point of view that we get a strong partner that has muscles to be a bit more resilient than on a quarterly basis, which was our reality as a listed company in Sweden,” Aagerup said in a telephone interview. Q-Med talked to other potential buyers but “nobody else was interested at this level,” he said.

Sensitive Skin

Galderma’s Cetaphil product line includes cleansers, moisturizers and sunscreens for damaged or sensitive skin. It also markets Azzalure, a Botox competitor manufactured by Ipsen SA.

Q-Med rose 8.50 kronor, or 13 percent, to 74.75 kronor at 3:35 p.m. in Stockholm trading. Before today, the shares had returned 40 percent this year including reinvested dividends, compared with a 23 percent return for the OMX Stockholm 30 Index.

Aagerup founded the company in 1987 to bring to market his research on hyaluronic acid, a chemical naturally present in the body that can be used for wound-healing, joint pain and to create volume under the skin.

Q-Med stabilized and patented a form of the acid, according to the company’s website. Its first product, Restylane, won approval in Europe in 1996 to fill out wrinkles and plump lips. The company first sold shares on the Stockholm stock exchange in 1999.

Galderma would gain five products derived from hyaluronic acid including Restylane, which works differently from its own Azzalure.

Azzalure, like Botox, is based on a purified form of the poison botulinum and works by freezing the facial muscles. Restylane, by contrast, creates a cushion under the skin that smoothes out the wrinkles.

Nordea Corporate Finance advised Q-Med, while Credit Suisse Group AG and Swedbank Corporate Finance served as advisers to Galderma.

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