General M&A
September 4, 2021
5 minutes read

Deal: Advent, GIC To Buy Swedish Drugmaker Sobi For $8B

In a type of deal that signals the globality of modern finance, two major investment firms, one American and the…

In a type of deal that signals the globality of modern finance, two major investment firms, one American and the other from Singapore, are teaming up to pursue a big buyout on the Swedish stock markets. It’s Advent International, a US-based private equity firm, teaming up with Singapore sovereign wealth fund GIC to buy Sobi, a Swedish drugmaker.

Advent and GIC have offered to pay the equivalent of $8.1bn to acquire all shares of Sobi, which is listed on the Stockholm Stock Exchange (STO: SOBI). That price marks the largest buyout of a Swedish company in more than five years. It’s 35% above Sobi’s closing price the last day before acquisition rumors of the company began swirling.

Already, Sobi has signaled that the buyout offer will likely proceed, recommending to shareholders that they accept the offer. The two biggest shareholders of the drugmaker with a combined stake of about 46% have given their approval, leaving just a few percent left for majority approval that’ll seal the buyout.

Sobi, officially Swedish Orphan Biovitrum, makes drugs targeting rare diseases, the type usually found in minority percentages of the population. It’s a medical niche that can build big businesses, with Sobi of Sweden having $1.8bn in sales and a net profit of $380mn in 2020.

Given its financials, Advent-GIC will be paying a multiple of 4.5x annual sales and 20x annual earnings to buy Sobi. That’s a typical multiple in the climate of biotech deals.

Under private equity ownership, it’s likely that Sobi will function like the many other companies that have gone through that route; continue to grow its business with the goal of its owners exiting it for a higher price later.

It seems that foreign investors like Advent and GIC are increasingly venturing into European markets, humorously after buying up all the assets in their countries. This year has seen a considerable uptick in private equity buyouts for European nations like Sweden and the UK, with dealmaking at the highest level in years. Vice versa, European PE firms are also buying up American companies at record rates this year.