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Dassault to Buy Medidata in $5.7 Billion Shift to Health

Ed Hammond, Ruth David and Manuel Baigorri
Dassault to Buy Medidata in $5.7 Billion Shift to Health

(Bloomberg) -- French technology company Dassault Systemes SE agreed to buy Medidata Solutions Inc., a software firm that analyzes clinical trials, for $5.7 billion to bolster its offerings to the pharmaceutical industry.

The record deal will allow Dassault to offer drugmakers a complete set of services and ride a shift toward personalized medicine, in which research and tools are tailored to individual patient profiles, generating the need to analyze vast amounts of data.

Health is becoming a crucial market for Dassault, which also creates 3D design software, said Pascal Daloz, the company’s chief financial officer. Medidata offers clients wearable sensors that help track patients’ health in real life and biomarker analysis to select which ones may best respond to drugs. It estimates that 13 of the top 15 medicines sold last year relied on its technology.

“This is by far the largest acquisition we’ve ever made,” Daloz said on a conference call, highlighting Dassault’s interest in the health market.

Drugmakers’ Costs

The all-cash transaction values Medidata at $92.25 a share -- 17% more than Medidata’s closing price on April 18, the last trading day before Bloomberg reported Dassault’s interest in the New York-based company.

Medidata shares were down 3.5% to $91.45 at 9:59 a.m. in New York. Dassault fell 1.5% to 134.45 euros in Paris.

The deal is expected to close in the final quarter of 2019 and start boosting earnings as early as 2020, the companies said in a statement.

Drugmakers faced with rising development costs are outsourcing many parts of their research and development efforts, using specialized providers of services and technology.

Medidata counts most of the biggest drug companies in the world as customers, according to supply-chain data compiled by Bloomberg. It provides a cloud-based subscription service that helps medical device, diagnostic and pharmaceutical companies manage and analyze clinical trials. Its revenue more than doubled from 2013 to 2018, when it brought in $635.7 million.

Dassault, with a market value of 36 billion euros ($41 billion), offers software and services for industries ranging from aerospace and defense to consumer goods. The life sciences business counts many major pharma companies among its clients.

The planned acquisition, endorsed by both boards, marks the first time the French company has resorted to external funding, according to Daloz. Dassault will finance the takeover with a 1 billion-euro loan, a 3 billion-euro bridge-to-loan facility and available cash.

(Updates with Dassault shares in sixth paragraph.)

--With assistance from Liana Baker, Geraldine Amiel and Marie Mawad.

To contact the reporters on this story: Ed Hammond in New York at ehammond12@bloomberg.net;Ruth David in London at rdavid9@bloomberg.net;Manuel Baigorri in Hong Kong at mbaigorri@bloomberg.net

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, ;Giles Turner at gturner35@bloomberg.net, Jeff Sutherland, Thomas Mulier

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