LONDON (Alliance News) - Hikma Pharmaceuticals PLC Wednesday said it has agreed to purchase the assets of Ben Venue Laboratories Inc's US generic injectables business for up to USD300.0 million, in a move to strengthen its position in the area.
In a statement, Hikma said it will pay USD225.0 million up front in cash, with the remaining amount depending on whether certain performance targets are met over a five-year period.
Ben Venue Laboratories is a member of the Boehringer Ingelheim Group of Companies. Its US generic injectables business is named Bedford Laboratories.
In addition, Hikma said it has entered an exclusive deal with the Boehringer Ingelheim Group to potentially acquire substantially all of the assets of the Ben Venue manufacturing facility in Bedford, Ohio, a large sterile injectable manufacturing site.
Bedford is a generic injectables company with the third largest portfolio of generic injectable products in the US. Under the agreement, Hikma is acquiring Bedford's assets, including a large product portfolio, intellectual property rights, contracts for products marketed under license, raw material inventories, its research and development and business development pipeline, and a number of employees across key business functions.
"Bedford's impressive product portfolio and deep pipeline will significantly increase the scale and scope of our rapidly growing US injectables business. The large number of high value, niche and differentiated products we are acquiring will strengthen our market position in the US and will benefit patients by bringing back products to the market that are currently in short supply," Chief Executive Said Darwazah said in a statement.
"Through our disciplined approach to mergers and acquisitions, we have established an excellent track record of making value enhancing acquisitions. I am confident that we have the technical capabilities and manufacturing expertise to successfully re-launch the acquired products over the next few years and our success in integrating the MSI acquisition will help to ensure a smooth integration. We remain committed to investing in the long term growth of our injectables business and we believe that this transaction will deliver significant future value for the group," the CEO added.
In 2013, Hikma's global injectables business generated USD536 million in revenue, accounting for 39% of its revenue. In May 2011, Hima completed the acquisition of Baxter's multi-source injectables business, which gave its US Injectables business more scale. Hikma wants to increase its US injectables market share by value through investment in a strong product portfolio and pipeline.
The assets being acquired generated USD19.0 million in revenue in 2013, but negative earnings before interest, tax, depreciation and amortisation of USD22.0 million, which Hikma said reflects the limited sales of Bedford's products following manufacturing issues at its affiliate, Ben Venue, which halted production in 2013.
Hikma said it expects the acquired assets to generate limited revenue in 2014 and 2015 while products are being transferred to Hikma's manufacturing sites.
By 2017, Hikma expects revenue from the acquired assets to have increased to around USD150 million, as the acquired products are re-launched and certain pipeline opportunities are realised, with strong growth potential thereafter.
Centerview Partners and Citigroup Global Markets Ltd acted as financial advisers to Hikma. Citi and HSBC Holdings PLC jointly led the arrangement of the financing. White & Case LLP acted as lead counsel to Hikma. Bank of America Merrill Lynch acted as the financial adviser, and Covington & Burling LLP acted as counsel, to Ben Venue.
Hikma Pharmaceuticals shares were Wednesday quoted at 1,630 pence, up 0.9%.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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Hikma Pharmaceuticals (HIK)