Merck KGaA is considering a sale of its allergy business as the German company seeks to reduce debt following the $17 billion takeover of Sigma-Aldrich Corp., according to people with knowledge of the matter.
The business, known as Allergopharma, may fetch about 600 million euros ($636 million) and could attract interest from drug companies and private-equity firms, the people said, asking not to be identified because the deliberations are private. The process is at an early stage and Merck could still decide against a sale, the people said.
The Sigma-Aldrich acquisition, the company’s biggest to date, was financed through a mix of cash and debt and will let Merck reduce its dependence on drugs after more than a decade of failing to develop a new one. The Allergopharma business focuses on diagnosing allergies and treating them by training patients’ immune systems to be less reactive to substances such as mold and pollen.
A representative for Merck declined to comment.
Shares of Merck climbed 0.5 percent to 96.72 euros as of 10:22 a.m. in Frankfurt trading. The stock has advanced about 23 percent this year.
Merck’s financial debt soared to 10.3 billion euros by the end of September, from 5.6 billion euros at the end of December, according to a presentation made by the company earlier this month.
Maintaining its investment grade rating is a priority for the drugmaker.
“They are still very leveraged, they still need to do more,” Fabian Wenner, an analyst at Kepler Cheuvreux, said by phone on Friday.
Allergopharma makes products to diagnose and treat type 1 allergies such as hay fever or allergic asthma, and is also developing new therapies that use the body’s immune system. Merck had planned to expand production in Reinbek, near Hamburg, next year to meet higher demand for its treatments as the number of people with allergies grows globally.
November 26, 2015