Hikma acquires Roxane Laboratories, Boehringer Ingelheim Roxane
LONDON — Hikma Pharmaceuticals on Wednesday announced its acquisition of Roxane Laboratories and Boehringer Ingelheim Roxane (together, “Roxane” — an American specialty generics company) from Boehringer Ingelheim for about $2.65 billion.
“This transaction has significant strategic value for us, transforming our position and scale in the U.S. generics market," Hikma CEO Said Darwazah said. “Roxane’s impressive portfolio, attractive pipeline and R&D expertise, focusing on higher value, niche and differentiated products, will create a platform for sustainable long-term growth.”
Darwazah said the acquisition also “significantly expands our manufacturing capacity and technological capabilities.”
As a result of the deal, Hikma will pay gross consideration of $1.18 billion in cash and issue 40 million new shares to Boehringer. The new Hikma shares are valued at £23.50 per share. Based on this number and the US:GBP exchange rate of 1.56:1, the aggregate value of the gross consideration payable on closing approaches $2.65 billion.
Hikma will also issue contingent cash payments of up to $125 million, subject to the achievement of certain performance milestones, according to the company.
Hikma noted the following highlights of the transaction:
The transaction transforms Hikma’s position in the U.S. generics market, establishing Hikma as the sixth largest company by revenue.
The transaction adds significant breadth to Hikma’s U.S. portfolio, bringing 88 highly differentiated products in specialized and niche segments of the market, including oncology, respiratory, extended release and controlled substances.
The transaction enhances Hikma’s pipeline, adding 89 R&D projects, including 57 Paragraph IV products (13 of which are first-to-file opportunities).
The transaction creates sustainable long-term growth potential, adding Roxane’s R&D team with a successful track record of bringing new and differentiated products to market.
The transaction adds a best-in-class manufacturing facility with technologically complex formulation and alternative dosage form capabilities, including modified release solid orals and high potency formulations.
Boehringer’s approximate 16.71% equity stake reflects a shared conviction in the future growth potential of the Hikma Group and allows Boehringer to focus on growing its global core businesses.
The transaction targets Roxane revenue of $725 million to $775 million in 2017, and an EBITDA margin of around 35% over the medium-term.
The transaction is expected to be accretive to adjusted earnings per share (“EPS”) in 2016 and very strongly accretive to adjusted EPS thereafter.
“Roxane is highly complementary to our existing U.S. business,” Michael Raya, CEO of West-Ward, Hikma’s wholly-owned subsidiary in the United States, said. “Today we are a market leader in generic injectables with a large and increasingly differentiated product portfolio. The acquisition of Roxane will significantly strengthen our non-injectables business, bringing a broad and diversified non-injectables portfolio, strong R&D capabilities and well-invested, state-of-the-art manufacturing facilities. With this acquisition, we will transform our US operations, becoming the sixth largest U.S. generics provider and ensuring we have the ability to continue our strong trajectory of growth.”