Teva seen as most likely buyer of Ratiopharm

FRANKFURT/LONDON (Reuters) - Israel's Teva (TEVA.O) is seen as the most likely buyer of drugmaker Ratiopharm, the crown jewel of the Merckle family's business empire which it has agreed to sell under pressure from its banks.

The 74-year-old German tycoon Adolf Merckle committed suicide on Monday, in despair over huge losses suffered by his business empire during the financial crisis.

Those losses forced the group last year to seek stop-gap loans from its banks, which in turn demanded the sale of Germany's second-largest maker of generic drugs after Novartis's (NOVN.VX) Sandoz/Hexal unit.

Its sale had been seen as a foregone conclusion even before Merckle's death and his family's main investment vehicle VEM confirmed on Wednesday that it had agreed to the disposal.

Teva, the world's largest generic drugmaker, could use Ratiopharm to gain a foothold in Germany and has the funds to finance the deal, several analysts said, including Andreas Theisen at WestLB.

"Teva is the obvious buyer," a London-based banker with a focus on healthcare agreed, adding that Sanofi-Aventis (SASY.PA) -- also rumored to have an interest in Ratiopharm -- would rather look at other assets with more emerging market exposure.

However, Teva has recently won bulk-purchase contracts from Germany's largest health insurer AOK, and might seek to boost business in Europe's largest generics market on its own strength, Theisen cautioned.

"It's imaginable that Teva emerges as an opportunistic buyer, taking advantage of a low price," he said, adding that the price was bound to come under pressure because the Merckle family was a forced seller.

Nobody at Teva was immediately available for comment.

Ratiopharm could also be split up and its most attractive businesses -- its eastern Europe activities and its over-the-counter drug unit -- could end up on the auction bloc separately, Theisen said.

TOUGH GERMAN GENERICS MARKET

The financial crisis and a regulatory overhaul in Ratiopharm's home market, which is hurting companies' profits, are weighing on the likely price for the group, which employs 5,400 staff and had sales in 2007 of 1.8 billion euros.

"Originally there was talk of a 4 to 5 billion euro price tag but it is likely to be significantly less -- perhaps in the range of 2 to 3 billion," another healthcare banker said.

Excessive debt at Merckle-controlled HeidelbergCement (HEIG.DE), wrong-way bets on Volkswagen (VOWG.DE) shares and a slump in the value of its equity portfolio forced the Merckles to seek a debt lifeline from banks.

Teva, which has just bought U.S. rival Barr Pharmaceuticals for $7.5 billion to expand its operations in the United States and Europe, said in September that opportunities to expand in Germany were on its radar screen.

While the death of Adolf Merckle was seen by one banker as potentially speeding up a sale, one London-based analyst said it might also slow the process down.

"The obviously sad news could either accelerate or delay the sale, as his family mourns the death. It's up in the air," the analyst said.

Under the agreement with the banks announced on Wednesday VEM said a trustee would be appointed by itself and the banks to guide the sale process, in cooperation with Ratiopharm's existing management.

Nevertheless, the process will require a potentially lengthy overhaul of the company's books to provide more insight into its operations, a Germany-based analyst said.

(Editing by Greg Mahlich)