Date: 2014-10-09
Type of information: Company acquisition
Acquired company: Tower Holdings, Lineage Therapeutics (USA - PA)
Acquiring company: Impax Laboratories (USA - CA)
Amount: $700 million
Terms: * On October 9, 2014, Impax Laboratories announced the execution of a definitive agreement under which Impax will acquire Tower Holdings, including operating subsidiaries CorePharma and Amedra Pharmaceuticals , and Lineage Therapeutics for $700 million in cash, subject to certain customary purchase price adjustments. The privately-held Companies being acquired specialize in the development, manufacture and commercialization of complex generic and branded pharmaceutical products. The transaction will provide Impax with a highly-profitable and growing commercialized portfolio of products that are expected to generate full year 2014 revenues of approximately $215 million to $225 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $80 million to $85 million on a standalone basis. Assuming a close within the next six months, the transaction is expected to be approximately $0.90 accretive to Impax's 2015 earnings per diluted share. Impax intends to fund the acquisition through a combination of approximately $270 million of cash on hand and a new $430 million term loan pursuant to a commitment from Barclays. This financing combination will enable Impax to move towards a more efficient capital structure while also allowing the flexibility to continue to pursue strategic business development and merger and acquisition opportunities. The transaction is expected to close within the next six months, subject to the satisfaction of customary closing conditions and regulatory approvals, including antitrust approvals in the U.S. Impax's financial advisor for this transaction is Barclays, and legal advisors are Sullivan & Cromwell LLP, Latham & Watkins LLP and McDermott, Will & Emery LLP. Credit Suisse Securities LLC served as financial advisor to Tower Holdings, Inc. and RoundTable Healthcare Partners LLC, and Sidley Austin LLP served as legal advisor.
Details: This acquisition will provide Impax with important strategic and financial benefits, including: The transaction will provide Impax with a DEA and FDA licensed manufacturing, packaging and warehousing campus in Middlesex, New Jersey, and will strengthen Impax's global Quality Improvement Program with the addition of the experienced team from the Companies.
• A Portfolio of Growing, High-Margin Commercial Products: This highly-profitable portfolio consists of four branded products, including the branded Albenza® franchise, seven complimentary commercialized generic products, and an epinephrine auto-injector product. This portfolio, in combination with several products that the Companies plan to launch during the fourth quarter of 2014, are expected to generate 2014 revenues of approximately $215 million to $225 million and EBITDA of approximately $80 million to $85 million, with gross margins comparable to Impax's 2014 estimated gross margins.
• A Leading Franchise in a New Specialty Brand Therapeutic Area: Albenza is the leading treatment for invasive tapeworm infections. This niche product has attractive margins and a record of strong sales growth with well-developed lifecycle management strategies to support continued returns. The addition of this new therapeutic area will allow Impax to more efficiently utilize its brand commercial infrastructure and provide upside growth potential.
• A Generic Pipeline with Near-Term Opportunities: Impax will acquire 5 approved generic products not yet marketed, 11 applications pending approval, and more than 35 additional products in various stages of development. Impax will evaluate all these opportunities as part of its combined portfolio prioritization process. According to IMS Health (NSP), this pipeline of 50 plus products represents approximately $10.7 billion in U.S. brand and generic sales for the last 12 months ended August 2014.
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