The first six months of 2012 have been busy for life science M&A dealmakers, with significant deals announced across the life sciences sector.
by Steve Poile
The first half of 2012 has been a busy period of consolidation with over 250 M&A deals announced, 15 of which were valued in excess of $1 billion, according to data provided by Current Agreements, the premium deals and alliances database (www.currentagreements.com).
The lead M&A deal of the year so far in terms of value was Watson‘s acquisition of Actavis for $5.93 billion back in April 2012. This was followed by BMS‘s acquisition of Amylin for $5.3 billion at the end of June.
Other bigpharma companies actively engaged in M&A duing the first half of 2012 include: Janssen, Forest, UCB, Takeda, GSK, Johnson & Johnson, Novartis, Baxter, Amgen, AstraZeneca, Daiichi, Sanofi, Shire, Dainippon, Pfizer, Eli Lilly and Biogen Idec
The deal that never was
In the early part o fthe year, Roche made a very public bid to acquire Illumina in a deal valued at $5.7 billion. However, after protracted wrangling, Roche abandoned the deal in April, having accepted its inability to persuade Illumina’s management of the merits of the deal.
Private equity sees value in a depressed market
2012 has seen a number of acquisition deals where private equity have acquired several life sciences companies, taking them off the public markets and into private hands.
The lead PE deal was the acquisition of BSN Medical by Montagu Private Equity and EQT VI for $2.25 billion.
Top 15 M&A deals
1. Acquisition agreement for Actavis
Headline value: $5.933 billion
Watson, Actavis | Bigpharma, Pharmaceutical
Watson Pharmaceuticals and Actavis Group jointly announced that Watson has entered into a definitive agreement to acquire privately held Actavis for an upfront payment of EUR4.25 billion.
As a result of this acquisition, Watson will become the third largest global generics company with 2012 anticipated pro forma revenue of approximately $8 billion. Actavis, which as a stand-alone company was positioned for strong growth, has a commercial presence in more than 40 countries and markets more than 1,000 products globally. Watson will acquire Actavis for an upfront payment of EUR4.25 billion.
Actavis stakeholders could also receive additional consideration, contingent upon Actavis achieving negotiated levels of certain 2012 performance targets.
The contingent payment, if fully earned, would result in the delivery of up to 5.5 million shares of Watson common stock in 2013.
2. Acquisition agreement for Amylin
Headline value: $5.3 billion
Bristol-Myers Squibb, Amylin | Bigpharma, Biotech
Bristol-Myers Squibb will acquire Amylin for $31.00 per share in cash, pursuant to a cash tender offer and second step merger, or an aggregate purchase price of approximately $5.3 billion.
The total value of the transaction, including Amylin’s net debt and a contractual payment obligation to Eli Lilly & Company, together totaling about $1.7 billion, is approximately $7 billion.
3. Merger agreement for DaVita and Healthcare Partners
Headline value: $4.42 billion
Davita, Healthcare Partners Medical Group, DavIta Healthcare Partners | Service
DaVita and HealthCare Partners announced that they have entered into a definitive merger agreement.
The two companies expect to close the transaction early in the fourth quarter of this year.
Upon closing, the combined company will be named DaVita HealthCare Partners Inc. The purchase price to be paid by DaVita is approximately $4.42 billion, subject to post-close adjustments and contingent consideration.
The purchase price consists of $3.66 billion in cash and approximately 9.38 million shares of DaVita common stock (which had a value of $758 million based on the closing price of DaVita’s common stock on May 18, 2012).
DaVita expects to fund the cash portion of the purchase price through a combination of available cash, additional borrowings under DaVita’s existing senior secured credit facilities (which are expected to be amended to permit these borrowings), and additional debt financing.
4. Acquisition agreement for Gen-probe
Headline value: $3.7 billion
Hologic, Gen-probe | Biotech
Hologic and Gen-Probe announced that their Boards of Directors have unanimously approved a definitive agreement under which Hologic will acquire all of the outstanding shares of Gen-Probe for $82.75 per share in cash, or a total enterprise value of approximately $3.7 billion.
The all-cash transaction is expected to be funded through available cash and additional financing of term loans and high yield securities.
The transaction is expected to be completed in the second half of calendar 2012.
5. Acquisition agreement for Boston Biomedical
Headline value: $2.63 billion
Dainippon Sumitomo, Boston Biomedical | Bigpharma, Pharmaceutical, Biotech, Medical device
Dainippon Sumitomo Pharma has reached an agreement to acquire Boston Biomedical. DSP will make an upfront payment of US$200 million to the shareholders of BBI and BBI on closing of the acquisition of its shares, and thereafter it will make development milestone payments up to US$540 million related to the compounds (BBI608 and BBI503) currently being developed by BBI.
Furthermore, after the launch, DSP will also make milestone payments up to US$1,890 million, based on the achievement of various net sales targets with the last milestone being paid upon net sales of greater than US$4 billion in any fiscal year.
6. Acquisition agreement for Human Genome Sciences (proposed)
Headline value: $2.6 billion
GlaxoSmithKline, Human Genome Sciences | Bigpharma, Biotech
GlaxoSmithKline announced that it will not participate in Human Genome Sciences strategic alternatives review process and will instead commence a tender offer this week to acquire all of the outstanding shares of HGS for US$13.00 per share in cash. GSK’s offer represents a premium of 81 percent to HGS’s closing share price of US$7.17 on 18th April, the last trading day before HGS publicly disclosed GSK’s private offer. GSK continues to believe that now is the appropriate time in the evolution of the GSK/HGS relationship for the companies to combine and that GSK is uniquely positioned to deliver on the promises of Benlysta, albiglutide and darapladib.
7. Acquisition agreement for Inhibitex
Headline value: $2.5 billion
Bristol-Myers Squibb, Inhibitex | Bigpharma, Biotech
Definitive agreement under which Bristol-Myers Squibb will acquire Inhibitex for $26.00 per share in cash pursuant to a cash tender offer and second step merger.
The transaction, with an aggregate purchase price of approximately $2.5 billion, has been approved by the boards of directors of both companies.
The board of directors of Inhibitex has agreed to recommend that Inhibitex’s shareholders tender their shares in the tender offer.
In addition, shareholders with beneficial ownership of approximately 17% of Inhibitex’s common stock have entered into agreements with Bristol-Myers Squibb to support the transaction and to tender their shares in the tender offer.
Bristol-Myers Squibb will commence a cash tender offer to purchase all of the outstanding shares of Inhibitex’s common stock for $26.00 per share.
8. Acquisition agreement for BSN Medical
Headline value: $2.25 billion
EQT, BSN Medical Montagu Private Medical | Medical device, Finance
EQT VI has agreed to buy medical device manufacturer BSN Medical from Montagu Private Equity for €1.8 billion (£1.4 billion). BSN has annual sales of €700 million and around 4,000 employees.
It is a major supplier of wound care, compression therapy and orthopaedic products to hospitals and pharmacies around the world.
9. Acquisition agreement for Zoll Medical
Headline value: $2.21 billion
Zoll Medical, Asahi Kasei | Medical device, Service
Asahi Kasei and ZOLL Medical jointly announced that Asahi Kasei, Japan’s leading diversified chemical manufacturer with businesses in the health care, chemicals & fibers, homes & construction materials, and electronics sectors, has entered into a definitive merger agreement with ZOLL, a manufacturer of resuscitation and critical care devices and related software solutions, pursuant to which Asahi Kasei will acquire ZOLL for approximately $2.21 billion.
The transaction has been approved by the Boards of Directors of both companies.
10. Acquisition agreement for Dako
Headline value: $2.2 billion
Dako, Agilent Technologies | Pharmaceutical, Biotech
Agilent Technologies and EQT, the Sweden-based private equity group, announced the execution of a definitive agreement for Agilent to acquire Dako.
The $2.2 billion acquisition (on a debt-free basis) is the largest in Agilent’s history.
In the rapidly growing diagnostics market, Dako’s products and capabilities are a strategic complement to Agilent’s existing offerings,” said Bill Sullivan, Agilent president and chief executive officer.
Dako provides antibodies, reagents, scientific instruments and software primarily to customers in pathology laboratories to raise the standards for fast and accurate diagnostic answers for cancer patients.
11. Acquisition agreement for Fougera
Headline value: $1.525 billion
Novartis, Fougera Pharmaceuticals | Bigpharma, Pharmaceutical
Novartis is buying specialty dermatology generics firm Fougera Pharmaceuticals for $1.525 billion in cash. The Swiss drug giant says adding Fougera to its Sandoz generics business will transform the latter into the world’s biggest generic dermatology medicines operation, with estimated annual global sales approaching $620 million. Fougera was previously part of Nycomed but has operated on a standalone basis since the sale of Nycomed to Takeda Pharmaceuticals in 2011.
The firm made net sales of $429 million in 2011 and employs about 700 people across its two primary sites in New York.
In addition to its U.S. dermatology generics business, the firm operates a branded specialty dermatology pharma business, PharmaDerm, with in-house expertise and facilities for formulation development, clinical development, manufacturing, distribution, and sales and marketing.
12. Acquisition agreement for Cameron Health
Headline value: $1.35 billion
Boston Scientific, Cameron Health | Service
Boston Scientific Corporation has closed its acquisition of Cameron Health, Inc. of San Clemente, California, and, as a result, added to its product portfolio the world’s first and only commercially available subcutaneous implantable cardioverter defibrillator, called the S-ICD System. The acquisition is the capstone of a nearly 10-year relationship between the two companies during which Boston Scientific invested in Cameron Health during its ground-breaking research and product commercialization efforts.
The transaction follows Boston Scientific’s exercise of its option to acquire Cameron Health announced on March 8, 2012.
Under the terms of the agreement, Boston Scientific paid $150 million at closing.
The agreement calls for an additional potential payment of $150 million to be made upon FDA approval of the S-ICD System and up to an additional $1.050 billion of potential payments to be made upon the achievement of specified revenue-based criteria over a six-year period following FDA approval.
13. Acquisition agreement for Ardea Biosciences
Headline value: $1.26 billion
AstraZeneca, Ardea Biosciences | Bigpharma, Biotech
AstraZeneca and Ardea Biosciences have entered into a definitive merger agreement, pursuant to which AstraZeneca will acquire Ardea.
Ardea’s clinically most advanced product candidate, lesinurad (formerly known as RDEA594), is currently in Phase III development as a potential treatment for the chronic management of hyperuricaemia in patients with gout. AstraZeneca will acquire Ardea for $32 per share which represents a total cash value of approximately $1.26 billion.
This represents a premium on the value of Ardea’s stock of 50% based on the one month volume-weighted average price and 54% based on the closing price on Friday, 20 April 2012.
14. Acquisition agreement for Robust Sun Holdings
Headline value: $1.2 billion
China Pharma Group, Robust Sun | Pharmaceuticals
China Pharmaceutical Group will pay $1.2 billion to acquire Robust Sun Holdings. The transaction will add to China Pharma’s presence in finished drugs and reduce its focus on intermediates and APIs.
China Pharma will purchase Robust Sun from Joyful Horizon. All three entities are affiliated with Hony Capital, the Hong Kong-headquartered PE firm that is the largest in Asia.
15. Acquisition agreement for Micromet
Headline value: $1.16 billion
Amgen, Micromet | Bigpharma, Biotech
Under the terms of the merger agreement, a subsidiary of Amgen Inc. will commence a tender offer to acquire all of the outstanding shares of Micromet’s common stock at a price of $11 per share in cash.
Following the purchase of shares through the tender offer, Amgen will complete the transaction by acquiring all remaining shares not acquired in the offer through a merger at the same price as the tender offer. The consummation of the tender offer is subject to various conditions, including a minimum tender of at least a majority of outstanding Micromet shares on a fully diluted basis, the expiration or termination of the waiting period under the Hart Scott Rodino Antitrust Improvements Act and other customary conditions.
Further details of each of these deals can be viewed in our Partnering Scorecard and also at Current Agreements, a leading life sciences deals and allainces database service.
What’s next in 2012?
What is to come in the second half of the year? Several things are for sure. Bigpharma needs compounds to feed their pipelines and products to market in their global sales and marketing infrastructure if they are to maintain market share and replace products coming to the end of patent life. Small pharma and biotech need funds to keep their research programs on the move and this is not readily coming from the venture capital markets. Therefore, further M&A is inneviably attractive to both sides. M&A allows bigpharma to acquire critical mass, whilst allowing the acquired company to realise value for its shareholders in tough market conditions.
It is anticipated that the reminder of 2012 will provide some significant additional M&A deals, as companies seek to consolidate their market position.
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