Abbott Reports It Will Buy Entire Pharma Business of Solvay

Belgian chemical and pharmaceutical group Solvay said on Monday it will sell its entire pharmaceutical business to Illinois-based global firm Abbott for more than 4.5 billion euros to focus on chemicals. The deal, which could rise to 5.2 billion euros (US$7.6 billion) if add-on clauses are met, sees Abbott take over all Solvay's pharmaceuticals employees and assume liabilities including future exposure to litigation. "The acquisition of Solvay Pharmaceuticals further diversifies our pharmaceutical portfolio, expands our presence in key high-growth emerging markets, enhances our investment in R&D and accelerates our long-term earnings-per-share growth outlook," said Miles D. White, chairman and chief executive officer, Abbott, in a statement. A separate statement said the deal, which Belgian press said amounted to "amputating" a Solvay division that delivered 50% of the group's 2009 first-half profits, was the result of "in-depth analysis and evaluation of the different strategic options" for the sector. The deal is expected to close in the first quarter of 2010. Abbott plans to fund the transaction with cash currently on the balance sheet, the firm said. Solvay said it would invest the proceeds in its original chemicals and plastics business, focusing on geographical expansion and attention to new products with a "low carbon footprint." "The proceeds from the divestment will be reinvested in external and organic growth with a sharp focus on long term value creation," said chief executive Christian Jourquin. Solvay's 2008 profits were slashed by almost half, which the group said in January was due to a fall in demand for its plastics and chemicals. A round of consolidation has taken place throughout the pharmaceutical industry since Pfizer, already the world's biggest pharmaceutical firm, announced a $68-billion takeover of Wyeth in January. That was followed by Merck agreeing to buy rival Schering-Plough for $41.1 billion in March. IW staff contributed to this story. Copyright Agence France-Presse, 2009