China's Shanghai Fosun Pharmaceutical is planning a bid for German generic drugmaker Stada, already the center of a 3.6 billion euro ($3.8 billion) takeover battle between two private equity consortia, two people close to the matter said.
Fosun Pharma is also holding early-stage talks with buyout funds including CVC about a potential joint bid, but may decide initially to go it alone with a view to taking financial investors on board later, one of the people said.
Fosun Pharma said it currently had no information to disclose. Stada declined to comment.
Stada is expecting to receive so-called confirmatory bids from a consortium comprising Advent and Permira as well as from rivals Bain and Cinven, who have teamed up as well, on Friday. Final bids are due just before Easter, the sources said.
The planned Stada bid is part of Fosun Pharma's overseas expansion plans, after it acquired an Indian drugmaker, Gland Pharma, last year. Fosun Pharma's Chairman Chen Qiyu had said in September that the firm was eyeing investments in other overseas markets.
The company is part of Chinese conglomerate Fosun International, headed by billionaire Guo Guangchang, which has been active in global mergers and acquisitions from property to finance.
For buyout groups it makes sense to partner with a pharma group, as industry players are usually able to reap cost savings from an acquisition, giving them an edge in pricing power in a takeover situation, the sources said.
After looking at Stada's books, the private equity firms may eventually offer up to 60 euros per share, the sources said, adding that the confirmatory bids will likely be around the initial level of about 58 euros per share or 3.6 billion euros for all of Stada's equity.
Stada had opened its books to potential acquirers after coming under pressure from its largest shareholder to consider various takeover approaches.
Cash-rich buyout firms looking to invest in stable healthcare businesses had been working on offers for Stada for months, people familiar close to the matter had said.
($1 = 0.9441 euros)