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Suitor in search of a Consort

The drug delivery specialist is now in the cross-hairs of a Swedish industry peer
November 18, 2019

Consort Medical’s (CSRT) board has recommended acceptance of a cash offer of 1,010p a share from Sweden's Recipharm AB (STO:RECI-B) – a pharmaceutical contract development and manufacturing group.

IC TIP: Hold at 1,040p

Consort’s share price increased by over 40 per cent in early trading following the offer, broadly in line with the implied premium based on the drug delivery specialist’s trading price on the last business day prior to the offer. The offer values Consort at £505m, or an enterprise value of £627m.

The group’s chairman, Christopher Brinsmead, said that “Recipharm's businesses are highly complementary” to Consort’s. But given the fragmentation at this end of the medical device market, the commercial rationale is clear in general terms – building scale, identifying cost synergies, while developing integrated cross-selling/marketing opportunities. If any further convincing was needed, bosses at Recipharm would have noted the recent development agreement with Regeneron Pharmaceuticals (US:REGN).