Dassault Systemes targets life sciences with $5.8 billion Medidata deal

[June 12, 2019]   By Sudip Kar-Gupta and Gwénaëlle Barzic

PARIS (Reuters) - France's Dassault Systemes moved to build up its life sciences presence with a $5.8 billion cash deal to buy Medidata Solutions, a U.S. firm focused on clinical trials.

Dassault Systemes has been doing deals to diversify its technology and software businesses further and its agreed acquisition of Medidata, its largest, follows its purchases of companies including Trace Software and Argosim.

Medidata has a market capitalization of around $5.9 billion, Refinitiv Eikon data shows, while Dassault has a stock market value of around 36 billion euros ($41 billion).

Although the $92.25 per share offered marked a slight discount to Medidata's closing price of $94.75 on June 11, analysts said that it was at a premium of 6.6% to Medidata's 50-day average price of $86.50 over the last 50 days.

Medidata's shares had also risen 5.5% to around $100 in after-hours trading on Tuesday, on growing speculation of a takeover by Dassault Systemes.

The French company added the Medidata takeover, which it said has a $5.8 billion enterprise value, would strengthen its position in life sciences and boost earnings from 2020 onwards.

"Multidiscipline scientific innovation and industrial performance call for a platform approach connecting the dots between people, ideas and data," said Bernard Charlès, Vice Chairman and CEO of Dassault Systèmes.

Deloitte this year forecast strong growth in the life sciences industry, saying it would benefit from a general rise in spending on healthcare, which in turn would necessitate more spending on technology. (https://bit.ly/2evoaRZ)
 

Dassault Systemes CEO Bernard Charles attends the Reuters Global Technology Summit in Paris May 17, 2010. REUTERS/John Schults

France's Dassault family has stakes in both Dassault Systèmes and the aerospace-focused Dassault Aviation company, but the two are separate entities.

Dassault Systeme's finance director, Pascal Daloz, said the French company had also signed a debt financing deal worth around 4 billion euros to fund its purchase of Medidata.

Invest Securities said the size of the deal had taken some investors by surprise, but Roche Brune Asset Management fund manager Gregoire Laverne said it was seen as a positive step.

"Dassault Systemes nevertheless has a big enough balance sheet to able to finance part of the acquisition," said Laverne, whose firms owns Dassault shares.

Medidata had 2018 revenue of $636 million, and Dassault Systemes expects to close the deal in the fourth quarter.

(Reporting by Sudip Kar-Gupta; Editing by Muralikumar Anantharaman, Gopakumar Warrier and Alexander Smith)

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