Nogine 'set to acquire ProStrakan' says expert

DUTCH pharmaceutical group Norgine's purchase of a stake in Borders-based ProStrakan was yesterday described as an "option to acquire" the business by one City analyst.

Shares in ProStrakan jumped by 16.25p, or 23 per cent, to 87p as the market reacted to the announcement late on Monday by Norgine that it had bought a 12.6 per cent stake in the company.

Peter Stein, chief executive of Norgine, told The Scotsman yesterday that the Scots firm was a business he felt represented an "interesting" investment opportunity but said the purchase of 25.5 million shares was not necessarily made with a view to seeking to take control of the company.

He reiterated a statement to the stock market that Norgine "has no current intention to make an offer for ProStrakan".

But Shawn Manning of brokerage Singer Research, who believes ProStrakan is worth at least 100p per share, said a deal between the two companies could make sense.

"We believe this stake represents an 'option to acquire' an essentially synergistic European business, with potential US operations perhaps representing longer-term benefit," he said.

He added that the purchase of the stake from French drug group Sanofi-Aventis gave Norgine an immediate "place at the table".

"It could also serve to flag future interest in acquiring additional stock from existing share holders," noted Manning. Norgine employs some 1,200 across Europe and specialises in gastrointestinal medicines and pain management therapies.

Shares in ProStrakan fell sharply in September after chief executive Wilson Totten left the company amid problems with the manufacturing of one of its products and delays in US approval for another.