BASF to snap up fish oil drugmaker Pronova BioPharma in $844M buyout

This might not be the big fish-oil drug acquisition industry watchers were anticipating. BASF, the German chemicals giant, plans to gobble up Norway's Pronova BioPharma, maker of the active ingredient in GlaxoSmithKline's blockbuster omega-3 drug Lovaza, in a cash buyout valued at NOK 4,845 million or $844 million.

The deal comes amid a frenzy of prognostications about the future of the market for prescription drugs made from purified fish oil. While BASF notes that the understood health benefits of omega-3 fatty acids have driven market growth, Forbes reported that prescriptions of Glaxo's ($GSK) Lovaza this year could drop from 2011 levels as physicians react to research that calls the benefits of omega-3 fatty acids into question. Glaxo is also expected to face new competition from Amarin's ($AMRN) rival drug Vascepa next year as a therapy for patients with very high triglycerides, which are a risk factor for heart disease along with LDL cholesterol.

Pronova's fortunes are closely tied to the success of the omega-3 market, as the company not only produces the active ingredients in Lovaza but is also investing in new formulations for the prescription drug market. Its lead candidate based on omega-3 fatty acids, PRC-4016, is in development for dyslipidemia or high lipid concentrations in the blood. In fact, at least a few other biotech outfits are advancing new fish-oil drugs. Omthera Pharmaceuticals this month spotlighted late-stage study data for its candidate, Epinova, with the company's management touting dosing advantages over Lovaza in patients with high triglycerides or blood fats.

BASF, which plans to acquire Pronova to beef up its nutrition and health business, has secured approval of the deal from the biopharma group's board and management as well as commitments from holders of 60% of Pronova's shares. The chemical company needs approval from holders of at least 90% of Pronova's shares to seal the deal, which is expected to close in the first quarter of 2013. As Reuters reported, Pronova's shares jumped above the NOK 12.50 per share bid from BASF in an apparent bet on a higher offer coming through. The BASF offer is a 24% premium on the average stock price of Pronova's shares over the past 6 months.

"The premium is a bit low but all in all, we are satisfied. This is still the best solution for shareholders," Gert Munthe, managing partner at Herkules, a major Pronova shareholder, told Reuters. "The process was initiated by Pronova. It is not likely there would be a higher bid. We have been in dialogue with other players and this is the best we could come up with."

Amarin ($AMRN), not Pronova, has generated the most buzz among the players in the omega-3 drug crowd as a buyout target. Speculation has pointed to potential pharma suitors such as AstraZeneca ($AZN), which has aligned itself for buyouts to restock its lineup of drugs. But BASF has come through with a real offer for Pronova.

- here's BASF's release
- check out Reuters' article

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