Insight journal - Deals and alliances

Dealmakers weekly review – May 29 2012 – GlaxoSmithKline, AstraZeneca, J&J, Sanofi, DaVita Healthcare Partners, Takeda, Royalty Pharma

Posted on 29 May 2012

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Mega merger forms DaVita Healthcare Partners, Bigpharma join forces in search for new antibiotics, and Royalty Pharma raises significant funds for further royalty deals.

The review

The past week has been relatively quiet in terms of significant partnering. The main deal of significance was the collaborative research agreement between AstraZeneca, GlaxoSmithKline, Sanofi, J&J and Basilea Pharmaceuticals for research into new antibiotics. The research is part of the European Commission action plan against the rising threat from antimicrobial resistance. The research project will have funding of up to $281 million provided by both the parties involved and the Innovative Medicines Initiative.

The only other deal of significance was the contract service agreement between NIH and VSE for information techology valued at £20 billion over the perid of the contract.

On the M&A front, DaVita and Healthcare Partners have agreed to merge in a deal valued at $4.4 billion to form DaVita Healthcare Partners. Meanwhile, Takeda has made further inroads into Latin America by acquiring Multilab for $273 million.

On the financing front, Royalty Pharma raised $600 million in debt for use in future royalty transactions. Arena Pharmaceuticals made a public offering of $69.9 million, and Sangart raised $50 million in an equity financing.

The numbers

Partnering deals: 59 (down on last week: 64)

M&A deals: 4 (down on last week: 6)

Financing deals: 18 (up on last week: 17)

Deals of note

1. Collaboration agreement for the development of new antibiotics

Headline value: $281 million

GlaxoSmithKline, Sanofi, J&J, AstraZeneca, Basilea, European Commission, Innovative Medicines Initiative

Bigpharma, Pharmaceutical - Infectives > Bacterial

New €224m (£180m) funding to enable development of antibiotics for bacterial infections and drive unprecedented information sharing.   AstraZeneca and GlaxoSmithKline welcomed the launch of a pioneering approach to antibiotic research in Europe that will see pharmaceutical and biotechnology companies working alongside public partners to tackle the rising threat from antibiotic resistance and address some of the key barriers to the development of effective antibiotics.   The objective of the proposed research programme is to improve the underlying scientific understanding of antibiotic resistance, design and implement efficient clinical trials and take novel drug candidates through clinical development.

The programme is part of the European Commission's Action Plan Against the Rising Threats from Antimicrobial Resistance, launched in November last year.

2. Contract service agreement for information technology

Headline value: $20 billion

VSE, NIH

Government, Services - Bioinformatics, Research services

VSE has been awarded a prime contract by the National Institutes of Health, an agency of the Department of Health and Human Services (HHS).

The 10-year, multiple-award, indefinite-delivery/indefinite-quantity government-wide acquisition contracts, have a cumulative ceiling value of approximately $20 billion.   The ceiling dollars are to be 100% federally funded.

3. Merger agreement for DaVita and Healthcare Partners

Headline value: $4.42 billion

DaVita Healthcare Partners, DaVita, Healthcare Partners

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).

4. Acquisition agreement for Multilab Indústria e Comércio de Produtos Farmacêuticos

Headline value: $273 million

Takeda, Multilab

Takeda Pharmaceutical Company jointly announced that both parties have signed an agreement whereby Takeda Farmacêutica Brasil Ltda.   Takeda expects that the transaction will be finalized by the end of 2Q of its fiscal year 2012.

Takeda Brazil will acquire Multilab in cash for Brazilian Real (BRL) 500 million upfront and up to BRL 40 million in additional future milestone payments to the owners of Multilab.

Other financial conditions were not disclosed.

5. Debt financing for $500 million

Headline value: $600 million

Royalty Pharma - Finance

Royalty Pharma, the industry leader in acquiring royalty interests in marketed and late stage biopharmaceutical products, announced that it has successfully issued $600 million of incremental Term Loan B debt through RPI Finance Trust ("RPIFT"), bringing total debt outstanding at RPIFT to approximately $3.4 billion.

Proceeds will be used to fund future acquisitions.

Dealtalk

In addition to deal announced there is always gossip and speculation of potential deals – here is just some of the Dealtalk from the last seven days.

Glaxo Avoids Market for Lemons by Buying Collaborators

German Drugmaker Riemser Said to Draw Private Equity Bids

Healthcare payers to get greater drug development role

French biotech sector struggling

Memphis medical device company MRI Interventions goes public

Bridgepoint wants to sell drugs maker Aenova for more than $500 million – sources

Meda Cash Flow Invites Pipeline Deal at 95% Discount

GSK addresses Human Genome poison pill

Steve Poile

 

Related links:

Partnering Scorecard 2012

M&A Scorecard 2012

Financing Scorecard 2012

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