Concordia Healthcare has entered into a definitive asset purchase agreement to acquire substantially all of the commercial assets of privately held Covis Pharma and Covis Injectables for US$1.2 billion in cash.
The Covis drug portfolio being acquired consists of 18 branded and authorized generic products with stable revenue, strong margins and free cash flow.
The distinctive product portfolio includes branded pharmaceuticals, injectables and authorized generics that address life threatening and other serious medical conditions in various therapeutic areas including cardiovascular, central nervous system, oncology and acute care markets.
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Key products are Nilandron, for the treatment of metastatic prostate cancer; Dibenzyline, for the treatment of pheochromocytoma; Lanoxin, for the treatment of mild-to-moderate heart failure and atrial fibrillation; and, Plaquenil, for the treatment of lupus and rheumatoid arthritis.
The acquisition is structured as an all-cash transaction with a purchase price of US$1.2 billion for the Portfolio being acquired.
The Company plans to pay for the acquisition through a mix of term loans, bonds and equity.
The Company has entered into a commitment letter with Royal Bank of Canada (“RBC”), pursuant to which, RBC has agreed to provide credit facilities and bridge commitments of up to US$1.6 billion (the “Credit Facilities”) to fully pay for the acquisition price and refinance all outstanding Concordia debt.
The Credit Facilities are subject to a number of customary conditions.
All obligations of the Company under the term loans will be secured by first priority perfected security interests in the assets of the Company and the assets of and equity interests in its subsidiaries.
The bridge commitments will be unsecured.
The Company is targeting leverage to be below 5x at the closing of the acquisition and expects net leverage to fall to ~3x by year end 2016.
The transaction is expected to be over 50% accretive to Concordia Adjusted EPS in 2015.
The acquisition, which is expected to close in the second quarter of 2015, is subject to satisfaction of customary closing conditions (including receipt of required regulatory approvals).
The Board of Directors of all parties to the transaction have approved the acquisition.