Temasek is said to plan S$1.35 billion stake sale in Asian drug distributor

SINGAPORE — Temasek Holdings Pte is exploring a sale of its stake in Asian drug distributor Zuellig Pharma, people familiar with the matter said.

The Singapore state investment firm has been speaking with advisers about a potential sale of its 20 per cent interest in Zuellig Pharma, which commands vast pharmaceutical distribution networks in about a dozen Asian markets, according to the people. Temasek may seek around US$1 billion (S$1.35 billion) for its holding in the Singapore-based company, the people said, asking not to be identified because the discussions are private.

Any deal would add to the US$28.4 billion of health-care acquisitions in Asia announced this year, according to data compiled by Bloomberg. The stake could draw interest from strategic buyers including Mitsui & Co, theJapanese trading house that's been expanding its health care operations, as well as private equity firms, the people said.

"Health care has strong potential given the rise in the aging population around the world," Ang Kok Heng, chief investment officer at Phillip Capital Management Sdn. in Kuala Lumpur, said by phone Tuesday. "Zuellig's ability to ramp up sales in recent years will make it ideal for someone who wants an instant presence in this sector."

FAMILY PATRIARCH

Zuellig Group was founded in 1922 by businessman Frederick Zuellig, who moved to Manila from Switzerland. The family trading house built out a number of different businesses and now has interests ranging from health care and pharmaceuticals to insurance and property, according to its website. Zuellig Pharma had US$10 billion in sales in 2015 generated by its 10,000 employees.

Temasek first invested in Zuellig Pharma in 2007. Deliberations are at an early stage, and there's no certainty they will lead to a transaction, the people said. Representatives for Temasek and Mitsui declined to comment, while a representative for Zuellig Pharma said she couldn't immediately comment.

The death of family patriarch Stephen Zuellig in January fueled speculation that his group could be put on the block. Stefan Butz, chief executive officer of Swiss rival DKSH Holding AG, said in July he would be interested in starting talks if Zuellig Pharma officially came up for sale.

"It's one of our key competitors, because they are particularly strong in the Philippines and in Indonesia and even the other markets," Mr Butz said in response to an analyst question on an earnings conference call. "We assume that they are dealing with the recent changes and making up their minds how they want to take the company forward."

A representative for DKSH declined to comment. BLOOMBERG