Mergers, acquisitions and takeovers have been a vital part of the business world for many years. In today’s tough and dynamic economic environment, many companies are in most cases faced with decisions regard this particular actions with the aim of maximizing profit and shareholders value. Through strategies such as takeovers and mergers, a company can develop a competitive advantage and consequently manage to increase the shareholders’ value. This can happen through various forms such as two or more companies combining efforts, partnering on a given product, or even one company outright acquire the other company thereby taking over all it operations including its debts and holdings. Over the years, the revolution shift in perception of IP assets, M&A procedures should and partially have been gradually adapting to specific requirements that have to put into consideration while dealing with such IP assets. This mostly can take either the friendly or the unfriendly takeovers also known as the Hostile takeovers. This paper will expound on my verdict after being consulted by Bayer AG, a company in the field of healthcare, in regard to the approach that they can take in order to acquire one of the product which is being produced, sold and has been patented by Sanochemia Pharmazeutika AG, a competitor of Bayer AG in the field of healthcare.
Bayer AG is one of the leading innovative medical and healthcare products company in the world, and the greatest command in Europe. It is well known in the international platform as compared to most of its competitors such as Sanochemia Pharmazeutika. It boosts of innovative products such as Animal health products, consumer care, pharmaceuticals and Diabetes car. On the other hand, Sanochemia is a middle-sized company that has innovatively tapped onto the previously unmet medical needs and discovery. According to the information retrieved from their official website, claims that the in house development of stereo-selective synthetic substances that are based on various patented processes is principle to their long term growth (Bryer 2002). Arguably, IP assets are in most cases referred to as the epitome of M& A deal breaker, that are as results of information asymmetries that emanate from varied factors such as when the IP assets are exaggerated or incompatible with the acquirers own IP portfolio (Bryer 2002).
Below, a table shows the criterion that I rate the negotiations that I have been consulted to analysed by Bayer AG and advise hem accordingly with regard to which strategy they can use to gain acquisition of Sanochemia’s assets including their patents and also gaining control of their production facilities.
After reviewing the data from both companies, it becomes apparent that Bayer AG is a more established company than Sanochemia. In fact, when looking at the fiscal year records of Sanochemia, they show that, since the year 2005, the value of the shareholders capital has been on a downward trend. Although they Sanochemia possesses great and innovative products, harsh business conditions are slowly pushing it out of the market. If done properly, the IP due diligence hat Bayer AG wants to acquire can ultimately reveal the true value and potentiality of Sanochemia’s assets. I would advise Bayer not to use the unfriendly takeover strategy but make a proposal that would end up adding value to the shareholders investment. It is obvious that during Negotiations, Sanochemia, which is the weaker party to the negotiations, is most likely to be harmed to a large extent in the process of due diligence. They will end up disclosing vital information about some of the most valued IP or products that constitute the biggest part of their business.
Normally, since most of the IP-driven M&A are conducted between non-proportionate parties that vary according to factors such as financial base, size, and their position in the market. In fact, at times the parties to the contract may be direct competitors as is the case between Bayer AG and Sanochemia phamaceutica. Therefore, my final verdict is that Bayer should approach Sanochemia with a friendly take-over at the first approach, but if they refuse to come to a conclusion, Bayer can result to unfriendly takeover strategies. This is possible because such power disequilibrium mostly leads to severe consequences especially for the weaker party to the negotiation even if their IP assets have been awarded the maximum possible legal protection.
References
Bayer, Science for a better life, Web. Retrieved on Feb. 24, 2014, http://www.bayer.com/
Bryer, Lanning, and Melvin Simensky, eds. Intellectual property assets in mergers and acquisitions. Vol. 12. John Wiley & Sons, 2002.
SANOCHEMIA Pharmazeutika AG, the speciality Pharma Company, Retrieved on Feb, 24, 2014. http://www.sanochemia.at/en/
