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Goldman Sachs Asset Management has agreed a more than €2bn deal to acquire drugmaker Synthon from BC Partners, according to people familiar with the matter, as it hopes to capitalise on demand for off-patent versions of complex medicines.
Private equity group BC Partners, which acquired a majority stake in the business in 2019 at an enterprise value of €750mn, will retain a roughly 25 per cent stake in the group after the Goldman Sachs deal, one of the people said.
Goldman Sachs’ investment arm beat rival bidders including the US private equity group TPG and London-based Permira, the people said. The current deal’s €2bn enterprise valuation takes debt into account.
When BC Partners acquired Synthon in 2019, the company was generating about €60mn annually in earnings before interest, taxes, depreciation and amortisation. Under the London-based investment firm’s ownership, Synthon’s earnings have grown to nearly €140mn by expanding in areas such as research and development and increasing the company’s salesforce.
Synthon specialises in developing and manufacturing generic versions of complex drugs. Its portfolio includes treatments for cancer, cardiovascular conditions and multiple sclerosis.
While generic drugs have historically often been cheap and commoditised, Synthon’s complex off-patent medicines require investment in research and development, and can face less competition. Overstretched healthcare systems are interested in cutting drug bills by replacing branded medicines as soon as the intellectual property protections expire.
The company is investing in R&D and setting up four manufacturing sites as it expects the number of pills coming off patent to double in the next 10 to 15 years, according to one person familiar with the matter.
The sale of Synthon by BC Partners takes the investment group’s exited positions to about €13bn in the past 18 months.
Private equity groups have been under pressure from their own backers to sell some of their holdings and return cash, as higher interest rates lead to a broader slowdown in takeovers and initial public offerings.
As part of the push to monetise its holdings, BC Partners has taken steps such as selling down its stake in the pet supply group Chewy and listing academic research publisher Springer Nature on the Frankfurt stock market.
It also agreed to sell IT business Presidio and the Italian frozen bakery group Forno d’Asolo this year. Last July it exited its investment in Italian machinery maker IMA in a multibillion-dollar deal that netted a more than double return for BC Partners on its investment.
Private equity groups globally are sitting on a record 28,000 unsold companies worth more than $3tn, a report by Bain & Co found in March.
Goldman Sachs, BC Partners and Permira declined to comment. Synthon and TPG did not respond to an immediate request for comment.
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