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Published on : Aug 25, 2014

The Swiss pharmaceutical giant Roche Holding AG has fixed on a deal of $8.3 billion in cash to buy the U.S. biotech company InterMune. This will make it the latest consolidation in multi-billion dollar deals in the business side of the pharmaceutical industry.

Roche stated on Sunday that it will pay $74.00 per share in a tender offer to InterMune. It represented a premium of 38 percent to the August 22nd closing price.

Severin Schwan, the Chief Executive Officer at Roche, said that the consolidation would help Roche improve its respiratory portfolio. He also mentioned a good cultural and strategic similarity between the two companies.

The acquisition of U.S.-based InterMune will make it the second biggest buyout by Roche, after their 2009 acquisition of Genetech for $47 billion.

Severin stated that the value-creating bolt-on acquisition will help Roche enhance its portfolio, instead of going for diversification or mega-mergers.

InterMune shares peaked sharply immediately after the takeover news. The $74 per share offered by Roche gave a 63 percent premium to the stock level on 12th of August. The huge premium is another marker that implies a lot of competition in the biotech industry, with promises of new drugs being created in larger companies.

Roche will now gain access to the InterMune drug Pirfenidone, the E.U. and Canada approved medication for Idiopathic Pulmonary Fibrosis. The drug is expected to generate sales upwards of $1 billion in 2019. Roche already sells the approved Pulmozyme for cystic fibrosis and Xolair for severe asthma.