Roche to buy U.S. biotech firm InterMune for $8.3 bln

By Ben Hirschler and Caroline Copley

LONDON/ZURICH (Reuters) - Roche Holding AG has agreed to buy U.S. biotech company InterMune Inc for $8.3 billion in cash, marking the latest multibillion-dollar deal in a consolidating pharmaceutical sector.

The Swiss drugmaker said on Sunday it would pay $74.00 a share through a tender offer for InterMune, representing a premium of 38 percent to the closing price on Aug. 22.

The acquisition, which has been recommended by the boards of both companies, is the largest by Roche since 2009, when it bought out the remaining stake it did not already own in U.S. group Genentech for around $47 billion.

The sale of InterMune will not come as a huge surprise to investors as people familiar with the matter said on Aug. 13 that InterMune was working with financial advisers to evaluate strategic options, due to takeover interest from big drugmakers.

Shares in the California-based biotechnology company rose sharply on that news, so the $74 offered by Roche marks a 63 percent premium to the stock's level on Aug. 12.

Such a hefty premium is not unusual in biotech takeovers, reflecting intense competition for promising new drugs among larger companies, which rely on small innovative firms for a growing proportion of their products.

Adding InterMune to its portfolio will give Roche a promising new drug, pirfenidone, for treating a progressive and ultimately fatal scarring condition of the lungs. Pirfenidone is approved for so-called idiopathic pulmonary fibrosis (IPF) in Europe and Canada, and is undergoing U.S. regulatory review.

Industry analysts expect the drug, which is given as a pill, to have sales of $1.04 billion in 2019, according to consensus forecasts compiled by Thomson Reuters Pharma.

The deal is a further step by Roche to diversify away from its reliance on cancer drugs, where it is the world leader, by expanding into other disease areas, such as respiratory medicine.

Roche already markets Pulmozyme for cystic fibrosis and Xolair for severe asthma in the United States and has other experimental respiratory products in clinical development, including another severe asthma drug called lebrikizumab.

However, the Swiss group's efforts to produce successful non-cancer drugs from its own labs have been mixed, with setbacks in recent years for experimental drugs against heart disease, diabetes and schizophrenia.

"BOLT-ON" ACQUISITION

Although it is paying a big price for InterMune, the deal is likely to be seen inside Roche as a "bolt-on" acquisition, given the company's own market value of around $250 billion.

Roche said the transaction was expected to be neutral for its core earnings per share in 2015 but would boost profits from 2016 onwards.

The Swiss company generates a large amount of cash, leading to persistent speculation about deals. In practice, its track record since Genentech has been for a series of small-scale purchases. It notably backed away from a $7 billion pursuit of gene sequencing firm Illumina Inc two years ago.

Recently, there has been talk that Roche might buy the shares in Japan's Chugai Pharmaceutical Co Ltd that it does not already own for about $10 billion, although Chugai has denied it was in talks for a such a deal.

InterMune had considered selling itself about three years ago but decided not to pursue a deal at that time due to uncertainty over clinical data for pirfenidone, people familiar with the matter told Reuters previously.

Interest in the company has been rekindled this year, however, following positive late-stage trial results and the fact the drug received a "breakthrough therapy" designation from the U.S. Food and Drug Administration (FDA). The term is reserved for drugs for serious diseases that appear to offer a substantial advance on existing therapies.

The FDA is due to give is verdict on whether to approve pirfenidone by Nov. 23 and Roche said it expected the launch the drug in the United States this year.

Healthcare companies are merging at a record pace, with year-to-date activity topping $346 billion, compared to $212 billion in the year-ago period, according to Thomson Reuters data.

Recent large deals have included AbbVie Inc's $54 billion acquisition of Shire Plc and Medtronic Inc's acquisition of Covidien Plc for $43 billion. AstraZeneca Plc, meanwhile, fended off a $118 billion takeover attempt by Pfizer Inc.

Under the terms of the InterMune agreement, Roche will commence a tender offer to acquire all outstanding shares in the U.S. firm no later than Aug. 29.

Citi is acting as financial adviser to Roche, while Centerview Partners and Goldman Sachs are acting for InterMune.

(Editing by Angus MacSwan and David Evans)