By Pablo Mayo Cerqueiro, Emma-Victoria Farr and Patricia Weiss
LONDON/FRANKFURT (Reuters) -German glassmaker Schott AG aims to sell more than 800 million euros ($859 million) worth of shares in its medical division, a source close to the matter told Reuters, in Frankfurt's largest initial public offering (IPO) so far this year.
Schott Pharma, a producer of medical vials, announced plans for a stock sale on Wednesday consisting of existing shares held by its parent, which will remain the majority shareholder.
The seller hopes the unit will be valued at around 4 billion euros in the IPO, or about 15 times its expected 2024 earnings before interest, tax, depreciation and amortisation (EBITDA) of more than 260 million euros, the source said.
Schott Pharma is looking to entice long-term investors, such as pension and sovereign wealth funds, to its share sale. It plans to formally start taking stock orders from mid-September, with a view to pricing the deal by the end of the month, the source added.
Schott said it was banking on supplying packaging for a class of weight loss drugs known as GLP-1. A surge in demand for the most prominent brand of that group, weekly injection Wegovy, has overwhelmed manufacturer Novo Nordisk (CSE:NOVOb) but Schott declined to name customers.
Among other growth trends, Schott said it would make pre-fillable syringes for messenger RNA therapies, a technology pioneered by BioNTech , Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) , for their COVID-19 vaccines.
Schott AG's medical vials division is choosing to go public as the IPO market shows signs of improvement, following an early wave of stock listings in Europe and the United States earlier in the summer.
German hydrogen firm Thyssenkrupp (ETR:TKAG) Nucera sought to take advantage of improving market sentiment by listing on the Frankfurt Stock Exchange in July, raising 526 million euros ($565 million) in gross proceeds.
Bank of America (NYSE:BAC), BNP Paribas (EPA:BNPP) and Deutsche Bank (ETR:DBKGn) are leading Schott Pharma's IPO.
Mainz-headquartered Schott Pharma focuses on the market for injectable drugs, which is estimated to grow at 9% annually until 2026, the company said.
The unit saw sales rise 8.4% in the first nine months of its fiscal year, with an EBITDA margin of 28%, according to its intention to float (ITF) announcement.
Vial manufacturers profited during the pandemic when vaccine makers scrambled for equipment as governments worldwide sought to inoculate citizens against the coronavirus.
Schott Pharma saw sales increase by a "double digit" percentage to 650 million euros in its 2021 fiscal year, 3% of which was COVID-19 related, according to a company statement.
In the 1890s company founder Otto Schott invented heavy-duty borosilicate glass, a raw material for medical bottles.
($1 = 0.9311 euros)