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March 30, 2015

Horizon Pharma to Acquire Hyperion Therapeutics for $1.1B

  • Horizon Pharma will acquire Hyperion Therapeutics for about $1.1 billion, the companies said today, in a deal that adds two complementary products to the buyer’s orphan disease drug portfolio.

    The acquisition will increase from five to seven the number of products marketed by Horizon, and diversify its revenue sources in orphan drugs, the company stated.

    Horizon will add to its portfolio the two marketed products of Brisbane, CA-based Hyperion—Ravicti® (glycerol phenylbutyrate) oral liquid and Buphenyl® (sodium phenylbutyrate) tablets and powder. Both treatments are indicated for urea cycle disorders (UCDs), a collection of inherited metabolic disorders said to affect about 2,100 people in the U.S., of which approximately 1,100 have been diagnosed. A marketing authorization application has been filed with European regulators for Ravicti.

    Last year Ravicti generated $30.8 million in net sales, while Buphenyl racked up $113.6 million.

    Dublin-based Horizon markets products in arthritis, inflammation, and orphan diseases. In the U.S., the company’s marketed products include Actimmune® (interferon gamma-1b), Duexis® (ibuprofen/famotidine), Pennsaid® (diclofenac sodium topical solution) 2% w/w, Rayos® (prednisone) delayed-release tablets, and Vimovo® (naproxen/esomeprazole magnesium).

    Horizon said it expects Hyperion to generate 2016 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of approximately $100 million—with expected cost-cutting or “synergies” of more than $50 million.

    “Additionally, this acquisition further accelerates our near- and long-term sales and adjusted EBITDA growth and provides significant value for both Horizon and Hyperion shareholders,” Timothy P. Walbert, Horizon’s chairman, president, and CEO, said in a statement.

    To fund the transaction, Horizon has secured $900 million in debt commitments from Citigroup Global Capital Markets and Jefferies, in addition to cash and cash equivalents. In addition to financing the deal, the money will also enable Horizon to repay its $300 million Senior Secured Credit Facility, and pay fees as well as expenses related to the transaction. Horizon said it had plans to replace a portion of the debt commitments through new debt issuances as well as the use of Hyperion's cash and cash equivalents.

    Horizon said it will launch an all cash $46-per-share tender offer for all issued and outstanding shares of Hyperion common stock, followed by a merger in which each remaining untendered share of Hyperion common stock would be converted into the $46 per share price paid in the tender offer.

    According to Horizon, some members of Hyperion’s management team and some funds affiliated with members of Hyperion’s board—all representing approximately 21% of outstanding Hyperion common shares—have agreed to tender their Hyperion common shares.

    The acquisition is expected to close in the second quarter of this year, subject to customary conditions that include the tender of a majority of outstanding Hyperion shares, and expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

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