Wednesday, June 12

Pharmaceutical holding company Roche sells Eurobonds to fund Telavant deal

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Eurobonds will allow Roche to raise part of the amount needed to complete the deal

Swiss pharmaceutical giant Roche is selling Eurobonds worth more than €1 billion. The reason for this decision is the purchase of Telavant, previously the property of Roivant Sciences and Pfizer. The total value of the transaction was US$7.1 billion.
The sale of Eurobonds will enable Roche to finance the acquisition partially. According to preliminary information, the Group intends to sell two types of bonds:
– bonds with a maturity of 4 years, for which the pharmaceutical company expects to receive about 45 basis points;
– bonds with a maturity of 13 years at 80 basis points over the average exchange rate.
Roche intends to use Eurobonds to finance mergers and acquisitions. The company also wants to use them to meet corporate objectives such as debt repayment, dividend payments or, if necessary, early redemption or refinancing.

eurobonds

Roche’s plans

The acquisition of Telavant became known in October 2023. Telavant is a pharmaceutical company developing treatments for inflammatory bowel disease. In addition, the purchase of Telavant will allow Roche to expand its experimental medicines business.
In December 2023, the Swiss pharmaceutical holding company completed the deal, which consisted of 5 parts. As a result, Roche managed to raise US$5.5 billion. The procedure involved the sale of euro-denominated bonds with maturities ranging from 3 to 10 years. Investors also participated in the transaction, placing orders worth US$12 billion.
Roche hopes that the acquisition of Telavant will strengthen its global market position. Since the beginning of 2023, the company’s shares have fallen by almost 18%, causing discontent among investors.

Terms of the Telavant acquisition

Under the terms of the deal, Roche will acquire the rights to develop, manufacture and sell Telavant, known as RVT-3101, in the US and Japan. Upon completing the transaction, Roche will pay US$7.1 billion immediately and a further US$150 million over time. The amount and timing of the repayments will depend on whether the drug meets expected profit and efficacy targets.
Telavant is a joint venture between Roivant and Pfizer. The main focus of the company is the research and commercialisation of a drug for several types of intestinal disorders, including:
– Crohn’s disease;
– Chronic diseases of the digestive system;
– inflammatory processes in the gut.
In addition, the drug is under active development, and its creators have not ruled out the possibility of using it to treat other related diseases in the future.

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