By Pamela Barbaglia

LONDON (Reuters – Poland’s biggest drug maker Polpharma plans to acquire Zentiva for $4 billion. The company is seeking investors for a share in Advent International, according to three sources.

The talks between Polpharma representatives and potential partners are in an initial stage. Sources said that the Polish company is yet to determine how to structure a joint bidding mechanism. They also warned that there was no guarantee of a deal.

Polpharma’s decision comes after Advent rejected proposals last year from banks to offer Zentiva an initial public sale (IPO). This is because stock market listings slowed in 2021’s second half, according to Reuters sources.

Polpharma requires a private equity firm with deep pockets to finance its bid for Zentiva, which could be valued at between 3 and 3.5 billion Euros ($4 billion). The sources claimed that JPMorgan (NYSE) has been hired to identify potential investors.

A representative from Polpharma claimed that the company was always looking to acquire targets and partner opportunities within its territory, but would not comment on specific deals.

JPMorgan refused to comment, while Advent wasn’t immediately available.

In recent years, private equity companies have been paying high prices for large generic drug portfolios of major pharmaceutical corporations. They played a crucial role in creating big players in the industry. However, some firms are looking to realize their investment.

The key to success is ‘PRICE’

According to BCC Research, the market for generic medicines is projected to increase from $411.6 million in 2020 to $650.3 trillion by 2025. This represents a compound annual growth rate 9.6%.

Advent Capital, a Boston private equity firm, purchased Zentiva. Zentiva makes generic and prescription drugs from the French pharmaceutical giant. Sanofi For 1.9 billion Euros in 2018, (NASDAQ:

Zentiva medicines can be found in more than 40 nations. The Prague-based company also has production facilities in India and Romania.

One source said that Zentiva has seen its core earnings rise to 200 million euro under Advent’s control. This was a result of a number of acquisitions, including the 2019 takeover by Creo Pharmaceuticals, the British company, and Alvogen’s 2020 purchase of Alvogen’s Central and Eastern European operations.

Zentiva’s Chief Executive Nick Haggar could command a valuation of over 15 times core earnings. The source also stated that the company saw a surge in value after the integration of Alvogen.

Advent is not in a rush to sell its portfolio company, and may back it for another year, according to two sources.

According to one, “The bid price plays a key role in luring Advent towards the negotiation table.” “Advent doesn’t run an auction. The interest parties have the right to make a deal.

Zentiva, Nov. 15th denied that Advent had been rumored to be looking for a sale of the company. The transaction was estimated at between 2.4 billion and 3 trillion euros.

($1 = 0.8821 euros)