Pharmaceutical sector firms Bioton and Polpharma are weighing a merger. The companies have signed a letter of intent which outlines the possibility of a fusion of the two or the potential purchase of Bioton’s antibiotics business by Polpharma as well as the latter firm’s possible acquisition of Bioton’s Italian subsidiaries.

According to a statement from Bioton, the firms are to prepare a feasibility study by December 15. Depending on the outcome of the study, a deal could by outlined by the end of February and a merger agreement concluded as early as August 2010.

The letter of intent also details the possibility of Bioton divesting itself of its antibiotics division and its Italian holdings, Fisiopharma and Pharmatex Italia.

“Our assessment is that the planned sale of the antibiotics division is beneficial for Bioton because it will enable the company to concentrate fully on the development of sales and production of insulin as well as on the development of other biotechnology products,” Sławomir Ziegert, CEO of Bioton, stated.

“We expect to earn in the range of zł.90-110 million from the sale of the Polish antibiotics business,” Mr Ziegert added.

It should be noted that Polpharma has backed out of a deal with Bioton before. It August 2008 it abandoned a transaction for more than 33 percent of Bioton’s shares, although the two firms came to a different agreement in April this year.

Bioton recently appointed its third CEO in less than a year.

The firm reported a net loss of zł.10.89 million for the third quarter, compared with a zł.18.86 million loss a year ago. Revenues fell to zł.66.2 million, from zł.67.4 million.

News of the possible tie-up sent Bioton’s stock up more than 12 percent. Its share price closed at zł.0.24 last Friday, unchanged on the week.

(Reuters)