Alex Philippidis Senior News Editor Genetic Engineering & Biotechnology News
Find out which big fish were devoured by larger ones last year.
Following is a list of the 25 largest merger and acquisition (M&A) deals disclosed in 2013 by drug developers, tools/tech companies, and CROs, ranked by deal value in U.S. dollars. Each acquired company is listed along with its acquirer or prospective acquirer, the price, the status of the deal—has it been completed, or simply announced?—and the percentage premium of the deal price to investors.
Most 2013 deals involved big biotechs, and even several big pharmas, snapping up smaller biopharmas. While the year did have a few multibillion-dollar blockbusters, led by Thermo Fisher Scientific’s $13.6 billion buy of Life Technologies (still pending at deadline), that deal was the only one to run into 11 figures. But the next 19 deals on the list ranged from $1 billion–$9 billion, which shows that big deals were alive and well in 2013, if not the uber-deals of recent-past years like Roche-Genentech and Sanofi-Genzyme.
Also interesting is how few of the deals combined upfront and milestone payments at the top of the list, and how many did so further down the rankings. While five of the top 25 and six of the top 30 deals included contingent payments, so too did six of the 10 deals ranked between No. 31 and No. 40—probably because the smaller deals involved less mature companies with promising product, but at earlier clinical stages still fraught with uncertainty over trial results, then regulatory action.
The list does not include M&A deals whose value was not disclosed—such as the AstraZeneca/MedImmune acquisition of AlphaCore Pharma, an Ann Arbor, Michigan-based biotechnology company focused on the development of ACP-501, a recombinant human lecithin-cholesterol acyltransferase (LCAT) enzyme. AstraZeneca was involved in five other deals that surfaced in 2013; the biggest was its up-to-$4.3 billion purchase of Bristol-Myers Squibb’s diabetes development operations. AZ’s acquisitions last year included Pearl Therapeutics, Amplimmune, Omthera, and Spirogen, for a combined more-than $1.3 billion upfront, and $1.225 billion in potential payments tied to milestones.
Another example of a company busier in deals than the list shows is Shire. In addition to ViroPharma ($4.2 billion), the biotech shelled out $160 million plus possible future milestones for SARcode, and did not disclose prices for Premacure and Lotus Tissue repair.
#25. Bever Pharmaceutical Pte Ltd.
Acquired by: Pharmstandard
Price: $590 million1
Deal Status: Completed August 17 through shareholder vote; completion announced August 222
Premium: 42% above the July 5, 2013, GDR price, and 35% above the July 5 ordinary share price, based on deal’s GDR price of $20.76 and ordinary share price of RUR 2,235
#24. Hi-Tech Pharmacal
Acquired by: Akorn Pharmaceuticals
Price: $640 million
Deal Status: Announced August 27. On January 3, 87% of Hi-Tech Pharmacal shareholders voted to approve the deal, though in an advisory vote, only 45% of shareholders voted in favor of executive-compensation packages to senior management, according to a Newsday report on which the company declined comment. Deal still expected to be completed in first quarter 2014, as originally announced.
Premium: 23.5% premium over closing price on August 26, 2013, based on deal price of $43.50 per share
#23. Xellia Pharmaceuticals
Acquired by: Novo A/S
Price: About $700 million
Deal Status: Completed May 213
#22. Trius Therapeutics
Acquired by: Cubist Pharmaceuticals
Price: About $704 million4
Deal Status: Completed September 11
Premium: 15% above closing price on July 30
#21. Astex Pharmaceuticals
Acquired by: Otsuka Pharmaceutical
Price: About $886 million
Deal Status: Completed October 11
Premium: 48% above the average closing stock price for the prior 30-day period, based on a deal price of $8.50 per share
#20. MAP Pharmaceuticals
Acquired by: Allergan
Price: About $958 million
Deal Status: Completed March 1
Premium: 60% above closing stock price of $15.58 on January 22, 2013, based on a deal price of $25 per share
#19. Aragon Pharmaceuticals
Acquired by: Johnson & Johnson
Price: Up to $1 billion5
Deal Status: Completed August 196
Acquired by: Jazz Pharmaceuticals
Price: About $1 billion
Deal Status: Announced December 20; deal expected to close in the first quarter of 2014.
Premium: 2.4% premium over Gentium’s December 16 closing price for its American Depository Receipts, based on deal price of $57 per share
#17. GlaxoSmithKline Pharmaceuticals Ltd. (India pharmaceuticals subsidiary)
Acquired by: GlaxoSmithKline
Price: $1.028 billion (Rs. 64 billion)
Deal Status: Announced December 16. Offing period expected to begin in February 2014; no projected closing date furnished.
Premium: 26% premium above the company’s closing share price on the National Stock Exchange of India (NSE) on December 13, 2013, and a 19% appreciation over the previous 12 months, based on deal price of Rs. 3,100 per share. The deal will enable GSK to raise its stake in the publicly listed Indian pharmaceuticals subsidiary from 50.7% to 75%.
#16. Pearl Therapeutics
Acquired by: AstraZeneca
Price: Up to $1.15 billion7
Deal Status: Completed June 27
#15. PRA International8
Acquired by: KKR
Price: More than $1.3 billion8
Deal Status: Completed September 25
#13 (tie). Paladin Labs
Acquired by: Endo Health Solutions
Price: About $1.6 billion
Deal Status: Announced November 5. On December 17, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 was terminated by the U.S. Federal Trade Commission; on December 18, the Canadian Competition Bureau issued a no-action letter, which constitutes Canadian Competition Act compliance for the deal, expected to close in the first half of 2014.
Premium: 20% premium to Paladin Labs’ share price of C$63.91 (about $60) as of November 4, 2013, based on deal price of C$77 (about $72) per share
#13 (tie). Ikaria
Acquired by: Madison Dearborn Partners
Price: About $1.6 billion9
Deal Status: Announced December 24 by Ikaria and leader of its selling investor group, New Mountain Capital. In addition to New Mountain, the group includes Arch Venture Partners, Venrock, and 5AM Ventures, which created the company in 2007 in an roughly $670 million cash-and-stock merger of INO Therapeutics and Ikaria Inc. Deal expected to close during first quarter of 2014.
#12. Novartis (blood transfusion diagnostics unit)
Acquired by: Grifols
Price: $1.675 billion
Deal Status: Announced November 11; deal expected to be completed in first half of 2014.
Premium: About three times 2012 net sales of $565 million
#11. Agila (injectables business of Strides Arcolab Ltd.)
Acquired by: Mylan
Price: Up to $1.75 billion10
Deal Status: Completed December 411
Acquired by: Salix Pharmaceuticals
Price: $2.6 billion
Deal Status: Announced November 7; deal expected to close in the first quarter of 2014.
Premium: 36% premium over Santarus’ November 6, 2013 closing price of $23.53 per share and an approximately 39% premium over Santarus’ average closing stock price for the prior 30-trading day period, based on deal price of $32 per share.
Acquired by: NewCo12
Price: Combination of deals totaling more than $2.6 billion13
Deal Status: Announced November 19; deals expected to be completed in the first half of 2014.
Premium: 64% above Patheon’s closing share price on November 18, based on deal price of $9.32 per share
Acquired by: BayerHealthCare
Price: $2.9 billion
Deal Status: Algeta board of directors on December 19 unanimously recommends deal approval by shareholders. Bayer expects to close the transaction during the first quarter of 2014.
Premium: 37% premium to Algeta’s closing share price on November 25, and 48% premium to the three-month volume weighted average stock price on November 25, the last trading day before the November 26 announcement of Bayer’s preliminary acquisition proposal
Acquired by: Shire
Price: About $4.2 billion
Deal Status: Announced November 11; deal expected to close by first quarter of 2014 “or as soon as possible thereafter.”
Premium: 27% premium to ViroPharma’s closing share price on November 8, 2013, the last trading day prior to announcement, and a 64% premium to ViroPharma’s unaffected share price of $30.47 on September 12, 2013, based on deal price of $50 per share
#6. Bristol-Myers Squibb (BMS; Diabetes development operations)14
Acquired by: AstraZeneca15
Price: Up to $4.3 billion—including $2.7 billion upfront, up to $1.4 billion tied to regulatory and sales-based milestones, and up to $225 million tied to the transfer of assets. AstraZeneca also agreed to pay BMS royalties on set sales through 2025
Deal Status: Announced December 19; deal expected to close in first quarter 2014.
#5. Warner Chlicott
Acquired by: Actavis
Price: About $8.5 billion
Deal Status: Completed October 1
Premium: Warner Chilcott shareholders will receive, for each share they own, 0.160 shares in the combined company. Based on Actavis’ closing price of $125.50 on May 17, that equals $20.08 per Warner Chilcott share—43% above the company’s average $14 per-share price for the 30 trading days ending May 9, the day before Warner Chilcott disclosed preliminary talks with Actavis; and 34% above Warner Chilcott’s closing May 9 price of $15.01.
Acquired by: Perrigo
Price: About $8.6 billion
Deal Status: Completed December 18
Premium: 10.5% above Elan’s closing ADR stock price July 26 of $14.93 on the New York Stock Exchange, based on deal price of $16.50 per share
#3. Bausch + Lomb
Acquired by: Valeant Pharmaceuticals International
Price: $8.7 billion16
Deal Status: Completed August 6
#2. Onyx Pharmaceuticals
Acquired by: Amgen
Price: $10.4 billion17
Deal Status: Completed October 1
Premium: 44% premium above the $86.84 per-share closing price of Onyx shares on June 28, the last full trading day before speculation surfaced about Amgen’s interest in snapping up the company, based on the deal price of $125 per share
#1. Life Technologies
Acquired by: Thermo Fisher Scientific
Price: $13.6 billion18
Deal Status: Announced April 15. Won European Commission clearance in November, after Thermo Fisher agreed to shed its cell culture (sera and media), gene modulation, and magnetic beads businesses. Deal expected to win all remaining regulatory approvals and close in 2014.
Premium: 12% above Life Tech’s closing price of $68 per share in April 12 trading on NASDAQ, based on $76 per share deal price
1 Price includes $542 million in shares and GDRs, and $48 million cash. Bever was 100% controlled by Bristley Enterprises, owned by a Pharmstandard nonexecutive board member Alexander Shuster, Ph.D. As a result of the deal, he became Pharmstandard’s second-largest shareholder with 18.74% of Pharmstandard’s shares.
2 In announcing completion, Pharmstand said: “It is expected that Bever will be included in a proposed spinoff of the company’s branded over-the-counter business.” See: http://pharmstd.com/archivedetails_4_551.html
3 Xellia acquired from investor 3i and other shareholders.
4 Deal initially valued at $818 million when announced on July 30, because it included for each Trius shareholder one Contingent Value Right (CVR), entitling the holder to receive an additional cash payment of up to $2 for each share they own if certain commercial sales milestones are achieved. The CVR provision was omitted from the announcement of the deal’s completion.
5 Price includes $650 million upfront, plus $350 million tied to undisclosed predetermined milestones.
6 As part of the deal, Aragon agreed to transfer all assets other than its androgen receptor antagonist program to a newly-formed company that Aragon said it will spin off. Johnson & Johnson will not have an ownership stake in the new company nor retain any rights to these products or programs, the companies said when the deal was announced June 17.
7 Price includes $560 million payable on deal completion, plus deferred consideration of up to $450 million tied to achieving specified development and regulatory milestones toward any triple-combination therapies and selected future products that AstraZeneca develops using Pearl’s technology platform. AstraZeneca said sales-related payments of up to a further $140 million would be paid if pre-agreed cumulative sales thresholds are exceeded.
8 KKR said June 24 it would acquire PRA International from Genstar Capital; the price was not disclosed, but numerous news reports quoted a price of $1.3 billion, citing unnamed sources. In a related deal announced July 31, KKR also acquired ReSearch Pharmaceutical Services (RPS) from Warburg Pincus for an undisclosed price, then folded RPS into PRA, where it operates as PRA’s Strategic Solutions Division. Warburg Pincus acquired RPS in 2010 for $227 million.
9 As part of the deal, selling group also plans to reinvest part of their proceeds into a 45% interest in a new parent company, while existing shareholders will own an independent research stage company that will be spun out of Ikaria. The research company will have three programs in clinical development and about $80 million cash to fund the programs to human proof-of-concept milestones.
10 Price includes $250 million in contingent consideration, payable in whole or in part to Strides upon satisfaction of certain regulatory conditions, and an enhanced escrow arrangement to fund any potential regulatory remediation costs. The stipulation was written into the sales agreement following its initial announcement on February 27 after FDA told Strides in September that one of its plants in Bangalore, India, had numerous violations of good manufacturing practice.
11 The U.S. Federal Trade Commission (FTC) on September 26 said it required, in return for approving the deal, that Mylan and Agila divest of assets for 11 drugs, all but one of them generic injectable drugs. The 11 include assets related to transplant antirejection drug mycophenolate mofetil, a Roche drug for which a generic version is expected to reach the market soon, as well as anti-arrhythmic heart drug amiodarone hydrochloride; surgical anesthetic etomidate injection; cancer drug fluorouracil; severe hypertension drug labetalol hydrochloride; detoxifying agent mesna; pediatric cancer drug methotrexate sodium (preservative-free); acetylcysteine injection, used to minimize liver damage following an acetaminophen overdose; fomepizole injection, used to treat some types of accidental poisoning; antiviral herpes drug ganciclovir; and last-resort antibiotic meropenem.
12 NewCo is the provisional name for the new contract development and manufacturing organization formed through a combination of Patheon and Royal DSM’s business group, DSM Pharmaceutical Products (DPP).
13 DPP agreed to buy Patheon for $195 million, then combine the companies into NewCo, which will be 51% owned by Patheon’s seller, the private-equity firm JLL Partners, with the remainder owned by DSM. JLL will contribute $489 million in cash to NewCo and DSM will contribute DPP and receive a seller note of $200 million, thereby valuing DPP at $670 million. NewCo would acquire Patheon for $9.32 per share, resulting in a total enterprise value for Patheon of about $1.95 billion.
14 BMS’ global diabetes business—developed through its collaboration with AstraZeneca— includes Onglyza (saxagliptin), Kombiglyze XR/Komboglyze (saxagliptin and metformin HCl extended release), dapagliflozin (marketed as Forxiga outside the U.S.), Byetta (exenatide), Bydureon (exenatide extended release for injectable suspension), Symlin (pramlintide acetate) and metreleptin.
15 As part of the deal, BMS will sell to AstraZeneca the former Amylin manufacturing facility in West Chester, OH; BMS acquired Amylin last year in a three-company, $7 billion deal involving Eli Lilly. In addition, AstraZeneca agreed to buy BMS’ Mount Vernon, IN, manufacturing facility about 18 months following the closing of the transaction.
16 Valeant combined the approximately $4.5 billion that will go to an investor group led by Warburg Pincus with about $4.2 billion that will be used to repay Bausch + Lomb’s outstanding debt.
17 Amgen and Onyx have also furnished the figure of $9.7 billion net of estimated Onyx cash.
18 Thermo Fisher also agreed to assume $2 billion in Life Tech debt.