By Pamela Barbaglia
LONDON (Reuters) - Italian drugmaker Sigma-Tau is in advanced talks to sell part of its Italian operations to domestic peer Alfa Wassermann that would create an over-the-counter (OTC) powerhouse, several sources familiar with the situation said.
Sigma-Tau is working with Milan-based Four Partners, an advisory firm led by Sigma board member Guido Tugnoli, said the sources, who declined to be identified because the matter is private.
"The talks are at an advanced stage," one of the sources said, adding that Sigma-Tau's family owners could sell up to 65 percent of the business.
The company's Italian operations could be valued at between 500 million euros and one billion euros, one of the sources said. He noted Sigma-Tau runs capital intensive manufacturing sites in central Italy and might need further restructuring following a first round of layoffs at its Pomezia plant in 2011 and the shut-down of R&D centres in Milan and Caserta.
Sigma-Tau would retain control of its rare diseases business as well as its U.S. subsidiary, Sigma-Tau Pharmaceuticals Inc, which could then be sold separately in a deal worth over 1 billion euros (0.79 billion pounds), two of the sources said.
It could not be ascertained whether talks to sell the Italian and U.S. rare diseases businesses are currently taking place but industry players are lining up for what are seen as appealing assets, said the sources.
The Rome-based drugmaker made its M&A debut in the U.S. market in 2010 when it acquired Enzon's speciality pharmaceutical business for $327 million. This unit markets products focussed on cancer, kidney disease, gastrointestinal and genetic related disorders. It also has clinical development programmes focussed on haematological cancer and malaria among others.
Sigma-Tau is majority-held by the Cavazza family. Italian bank Intesa Sanpaolo (MI:ISP) acquired a 5 percent stake in 2006, prior to the Enzon acquisition, in a deal that gave the drugmaker a total enterprise value of 1.5 billion euros.
Spokespeople for Sigma-Tau and Intesa Sanpaolo declined to comment. Representatives at Alfa Wassermann and Four Partners were not available for comment.
ITALIAN PHARMA DEALS
A combination of Sigma-Tau and Alfa Wassermann would create a national OTC champion in what would be another landmark deal for Italy's pharma industry after Rottapharm's recent sale to Swedish drugmaker Meda.
The two companies have been in talks for several months and have deep knowledge of each other's business pipelines having shared the same senior manager, Andrea Montevecchi, who moved to Sigma-Tau in 2011 as chief executive after a previous stint at Alfa Wassermann in 1985.
Alfa Wassermann, majority-held by the Golinelli family, ranks as one of Italy's leading players in contract manufacturing and reported a turnover of close to 400 million euros in 2013. Headquartered in Bologna, it employs an 1,370 people with several international subsidiaries including in the United States, the Netherlands, Poland and Russia.
Its main product is rifaximin, a gut-selective antibiotic which is approved in 33 countries including the United States.
Sigma-Tau reported near 700 million euros in revenue in 2013 and has a portfolio of more than 100 products.
The company, which employs around 1,900 people, started exploring a stake sale back in 2011 when it tapped private equity bidders ahead of a possible IPO that could have valued the business at more than $2 billion. But the company's chairman and majority shareholder Claudio Cavazza, who launched Sigma-Tau in 1957, died in June 2011 while talks were still at a preliminary stage.
Italy has totalled $3 billion (1.85 billion pounds) of pharma M&A since the beginning of the year, with Meda's takeover of Rottapharm in July -- whose brands include Saugella for intimate hygiene -- ranking as Italy's largest pharma deal in the last 10 years.
Other recent pharma deals in Italy include the sale of cancer drug specialist Eos (Ethical Oncology Science) to Clovis Oncology (O:CLVS) in 2013 and Charterhouse's acquisition of generic drug maker Doc Generici, also in 2013.
(Reporting By Pamela Barbaglia, editing by David Evans)