At least three of the world's top drugmakers are bidding for Brazil's Ache Laboratorios Farmaceuticos in an auction that may value the group at more than $5 billion, people familiar with the matter said.
Pfizer Inc, Novartis AG and Abbott Laboratories are all weighing second-round bids to acquire the company, which boasts a strong position in Brazil's fast-growing pharmaceuticals market, the people said.
Bids are due in the second half of April, two of the people said, asking not to be identified because the auction is not public.
Privately owned Ache is attractive to drug companies looking to increase their footprint in the growing market of Latin America. But one of the families that own the company has said it would like to hold on to its stake, and uncertainty has deterred some potential bidders.
GlaxoSmithKline showed early interest but has dropped out of the running, the people said.
Officials for the multinational companies all declined to comment.
People close to the process told Reuters in February that families with large share holdings in Ache had asked investment bank Lazard Ltd to explore a sale, although whether a deal will go ahead remained uncertain given divisions among the families controlling the company.
The Baptista and Siaulys families, who hired Lazard, are ready to sell up but the Depieri family would like to hold on to its stake, sources said.
"People are a bit worried about the situation surrounding the families selling it and are wondering if they are ever going to be satisfied with the price. Some people who were interested have pulled out for that reason," one source said.
Lazard has declined to comment on the bank's role in the process and an Ache spokesman reiterated the position that the company is not for sale.
Ache ranks fourth in terms of overall Brazilian drug sales but is the leader in prescription medicines and is also active in the rapidly expanding over-the-counter (OTC) business.
"Every large pharmaceutical company wants to get into emerging markets and Ache is the crown jewel asset in Brazil," said one industry banker, who wished to remain anonymous because he is not allowed to speak to the media.
Ache's earnings before interest, tax, depreciation and amortization (EBITDA) for the current year are expected to be around $300 million and the company's owners are seeking a lofty "high-teens" multiple of EBITDA in any sale, people familiar with the matter have said.
A multiple of 15 to 20 times would suggest a price tag of $4.5 billion to $6 billion.