Date: 2014-02-21
Type of information: Company acquisition
Acquired company: Cangene (Canada)
Acquiring company: Emergent BioSolutions (USA - MD)
Amount: $222 million
Terms: * On February 21, 2014, Emergent BioSolutions announced that it has completed its acquisition of Cangene Corporation for $222 million in cash. After payment by Cangene of transaction related costs, Emergent expects to receive approximately $40 million of cash from Cangene in connection with closing. The completion of the acquisition follows the successful conclusion of all closing conditions, including approval by the Ontario Superior Court of Justice and a positive vote by Cangene shareholders at a special shareholder meeting held on February 12, 2014. The transaction is consistent with Emergent’s growth plan in that it diversifies the company’s revenue mix, adds commercial product sales and contributes to earnings growth. * On December 11, 2013, Emergent BioSolutions announced that it has entered into a definitive agreement with Cangene Corporation (TSX: CNJ) under which Emergent will acquire all of the outstanding common shares of Cangene in an all-cash transaction valued at $3.24 per share on a fully diluted basis for an aggregate purchase price of $222 million. The transaction is consistent with Emergent’s growth plan in that it diversifies the company’s revenue mix, adds commercial product sales and contributes to earnings growth. The transaction is expected to be accretive in 2014, exclusive of transaction-related costs. The Boards of Directors of both companies have approved the transaction. Agreements are in place with shareholders who collectively control, directly or indirectly, approximately 61% of the outstanding common shares of Cangene, under which they have agreed to irrevocably support and vote in favor of the transaction. The companies expect to complete the transaction in the first calendar quarter of 2014. In connection with the transaction, Emergent has secured committed debt financing from Bank of America Merrill Lynch along with PNC Bank and J.P. Morgan Chase Bank, N.A., totaling $225 million, which, when combined with existing cash reserves, will be used to finance the acquisition and repay existing indebtedness. The company also anticipates there will be approximately $35 million of cash from Cangene at closing.
The transaction is structured as a Canadian court-approved plan of arrangement. Completion of the transaction is subject to approval by 66 2/3% of the votes cast by Cangene shareholders, approval by the Ontario Superior Court of Justice, certain regulatory approvals and customary closing conditions. Agreements are in place with shareholders who collectively control directly or indirectly approximately 61% of the outstanding common shares of Cangene, under which they have agreed to irrevocably support and vote in favor of the transaction.
Details: Emergent BioSolutions expects that the transaction will solidify its leadership position in growing biodefense market with 3 additional US government procured therapeutics. Cangene’s biodefense business consists of three medical countermeasures targeting botulinum, smallpox and anthrax, and each with an existing multi-year US government contract (BAT® (Botulism Antitoxin (Equine) Heptavalent) — the only FDA-licensed therapeutic for the treatment of symptomatic botulism following suspected or documented exposure to the botulinum neurotoxin serotypes A, B, C, D, E, F or G, VIGIV® (Vaccinia Immune Globulin Intravenous (Human)) — an FDA-licensed therapeutic for the treatment of complications due to smallpox vaccination, including eczema vaccinatum, progressive vaccinia, severe generalized vaccinia, vaccinia infections in individuals who have skin conditions, and aberrant infections induced by vaccinia virus, except in cases of isolated keratitis and AIGIV (Anthrax Immune Globulin Intravenous) — an investigational therapeutic designed for the treatment of toxemia associated with symptomatic inhalational anthrax). Cangene’s commercial product portfolio also includes four FDA-licensed, hospital-based specialty therapeutics targeting infectious diseases, hematology and transplantation and sold worldwide through an established commercial infrastructure. - WinRho® SDF (Rho(D) Immune Globulin Intravenous (Human)) — a therapeutic for the treatment of immune thrombocytopenia purpura (ITP) in Rho(D)-positive patients and for the suppression of Rh isoimmunization in non-sensitized Rho(D)-negative patients, otherwise known as hemolytic disease of the newborn (HDN). - HepaGam B® (Hepatitis B Immune Globulin (Human) Injection) — an immune globulin for the prevention of Hepatitis B recurrence following liver transplant in HBsAg-positive liver transplant patients and post-exposure prophylaxis in the following settings: acute exposure to HBsAg-positive blood, plasma, or serum, perinatal exposure of infants born to HBsAg-positive mothers, sexual exposure to HBsAg-positive persons, and household exposure to persons with acute HBV infection. - VARIZIG® (Varicella Zoster Immune Globulin (Human)) — a post-exposure prophylaxis of varicella in high-risk individuals intended to reduce the severity of chickenpox infections. - episil® — a medical device for the management and relief of pain associated with oral lesions of various etiologies, including oral mucositis/stomatitis, which may be caused by chemotherapy or radiotherapy. The transaction will also broaden manufacturing capabilities with revenue generating fill/finish business. Cangene’s contract manufacturing operations provide fill/finish services supporting over 20 approved products sold worldwide. Revenue for fiscal year ended July 31, 2013 was approximately $33 million.
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