Date: 2015-08-17
Type of information: Company acquisition
Acquired company: Cord Blood Registry®(CBR®) (USA - CA)
Acquiring company: Amag Pharmaceuticals (USA - MA)
Amount: $700 million (€ 631 million)
Terms: * On August 17, 2015, Amag Pharmaceuticals announced that it has completed the acquisition of Cord Blood Registry®(CBR®), the world\'s largest umbilical cord blood stem cell collection and storage company serving pregnant women and their families, for $700 million in cash (subject to certain adjustments). The transaction was announced on June 29, 2015, and is expected to be immediately accretive to AMAG\'s adjusted EBITDA and earnings. CBR executive Geoffrey Crouse will serve as president of CBR and executive vice president at AMAG, reporting directly to Mr. Heiden. Several members of the CBR senior leadership team will also remain with the organization. In addition, an expanded and integrated maternal health field effort will enable more than 100 sales representatives to promote Makena® and CBR to obstetricians throughout the country. In connection with the completion of this transaction, AMAG has closed on its offering of $500 million aggregate principal amount of senior notes due 2023. The notes, which are senior unsecured obligations of the Company, will mature on September 1, 2023 and will bear interest at the rate of 7.875% per year, with interest payable semi-annually beginning on March 1, 2016. Additionally, AMAG entered into a credit agreement with Jefferies Finance LLC and other lenders pursuant to which such lenders provided AMAG with a term loan in the aggregate principal amount of $350 million. Jefferies is acting as administrative agent and collateral agent for the lenders party to the credit agreement. The new term loan allows for the incurrence of incremental loans in an amount up to $225 million, plus additional amounts subject to a debt incurrence test, in each case subject to certain conditions. The term loan bears interest, at AMAG\'s option, at either the Eurodollar rate plus a margin of 3.75% or the prime rate plus a margin of 2.75%. The Eurodollar rate is subject to a 1.00% floor and the prime rate is subject to a 2.00% floor. The term loan contains certain mandatory principal repayments on a quarterly basis, as well as an excess cash sweep that is measured annually. The term loan matures on August 17, 2021. In addition to the debt financings, through a public offering of common stock, the company also raised total gross proceeds of approximately $230.9 million, before deducting the underwriting discounts, commissions and estimated expenses. This transaction closed on August 5, 2015. The proceeds from the senior notes, the new term loan and the recent equity offering were used to fund the acquisition of CBR, refinance certain existing indebtedness, pay various fees and will be used for the further expansion and diversification of AMAG\'s product portfolio and general corporate purposes. * On June 29, 2015, Amag Pharmaceuticals announced that it has entered into a definitive agreement to acquire Cord Blood Registry® (CBR®), the world\'s largest stem cell collection and storage company serving pregnant women and their families, for $700 million. The acquisition of CBR would expand AMAG\'s suite of maternal health offerings and add a high-margin business with complementary commercial capabilities and attractive future growth opportunities to the AMAG portfolio. The transaction has been unanimously approved by AMAG\'s and CBR\'s boards of directors. Closing of the transaction is subject to customary conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. It is anticipated that the transaction will close in the third quarter of 2015. Following the close of the transaction, Mr. Crouse will continue to lead the CBR business, and AMAG intends to name other CBR executives who will be joining AMAG in the near future. AMAG has secured $800 million in committed debt financing for the transaction from Jefferies Finance LLC and Barclays Capital which, in addition to AMAG\'s existing balance sheet cash, is sufficient to finance the transaction, repay AMAG\'s senior secured term loan and pay fees and expenses related to the transaction.
Details: CBR owns a state-of-the-art storage facility that houses more than 600,000 preserved umbilical cord blood and tissue stem cell units, which represents more than half of all privately stored cord units in the U.S. CBR also partners with leading academic institutions that conduct clinical trials focused on evaluating the use of stem cells for regenerative medicine applications in diseases and conditions that have no cure today, including autism, cerebral palsy and pediatric stroke. To date, CBR has helped more families than any other cord blood company use their privately banked cord blood for established and investigational treatments. In 2014, CBR generated pro forma revenue of approximately $126 million2 and adjusted EBITDA of $45 million. CBR has historically driven double-digit growth of its base of units and adds more new clients per year than its three largest competitors combined.1 Pro forma revenue3 from storage fees accounted for nearly 50% of CBR\'s total pro forma revenue in 2014 providing a predictable and sustainable base for potential future growth. AMAG is currently projecting 2015 pro forma revenue to be in line with or slightly above 2014 levels. Newborn stem cells have been used for more than 20 years in patients with over 80 serious diseases, including congenital diseases and those that present in childhood. Since 2005, 27 states, representing approximately 75 percent of the U.S. population, have passed some form of cord blood banking education legislation requiring that information be provided to pregnant women regarding all of their medically appropriate cord blood options. Despite the increase in research discoveries and clinical trial data on stem cells, as well as consistent growth of cord blood storage in the U.S., stem cells are currently collected from fewer than five percent of all U.S. births. The addition of CBR\'s complementary commercial capabilities, which include digital and social media direct-to-consumer education and awareness initiatives that offer an effective way to reach pregnant women, as well as a sales force that calls on the nation\'s busiest obstetricians and hospital labor and delivery units, will help expand AMAG\'s reach in the maternal health market. A combined and expanded maternal health sales effort at AMAG will provide greater coverage of obstetricians which, along with CBR\'s advanced consumer targeting and marketing expertise, will drive growth of Makena and CBR, and enable even stronger collaboration with healthcare providers and the broader maternal health community.
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