Japan's Nichi-Iko Takes Out Sagent Pharma for $736 Million Cash

July 11, 2016
By Mark Terry, BioSpace.com Breaking News Staff

Tokyo-based Nichi-Iko Pharmaceutical announced today that it will be acquiring Schaumburg, Illinois-based Sagent Pharmaceuticals for a total cash deal of about $736 million.

Nichi-Iko’s offer of $21.75 per share is a 40.3 percent premium to Sagent’s July 8, 2016 closing price of $15.50 per share. The deal is expected to close in the second quarter of Nichi-Iko’s fiscal year, which ends March 2017. There is also a second step to the merger, where all outstanding shares of Sagent common stock not tendered in the tender offer will convert into the right to receive the same amount in cash equivalent to the tender offer price.

“The U.S. market is a top priority for Nichi-Iko and we believe Sagent is an ideal partner to accelerate our international growth strategy,” said Yuichi Tamura, president and chief executive officer of Nichi-Iko, in a statement. “The company has a highly robust sales network, significant global relationships through its unique partner network, and an attractive portfolio of 55 products primarily in oncology, anti-infective, and critical care, of which, 30 percent have a No. 1 or No. 2 market share. The combination will give us the opportunity to strengthen our international competitiveness, leverage our production capacity over a wider range of products, and accelerate development of our biosimilars business. We are looking forward to working with Sagent’s talented management team and learning from what is clearly a highly skilled and productive workforce.”

Sagent stock jumped 40 percent on the news in premarket trading.

Nichi-Iko is focused on generic medicines, and the Sagent acquisition will allow it to grow its presence in the U.S. market. Sagent’s headquarters will stay in Illinois, and Nichi-Iko indicates no operations or management changes are expected.

“We are very pleased to be joining together with Nichi-Iko, Japan’s generic pharmaceutical leader, which has a proven track record of business growth and generic market expertise,” said Allan Oberman, Sagent’s chief executive officer, in a statement. “Both companies share a deep commitment to brand differentiation, product quality, and broad-based business creativity. The combination will maintain Sagent’s current operations and valued employees while providing accelerated expansion of our product offerings and accessibility to a robust pipeline of biosimilar pharmaceuticals. After thoroughly evaluating our strategic options, our board of directors has unanimously decided that this all-cash transaction is in the best interest of our stockholders. We are confident that Nichi-Iko is the ideal partner to help us push forward into our next stage of growth and solidify our position as a leading provider of affordable pharmaceuticals to the hospital and clinic market.”

Last month, Sagent acquired a portfolio of five Abbreviated New Drug Applications (ANDAs) in the U.S. from Israel’s Teva Pharmaceutical Industries and Dublin’s Allergan for $40 million. As a precondition to acquiring Allergan’s generics business, Teva has had to divest parts of its portfolio. As part of the five ANDAs, Sagent picked up Propofol Injectable Emulsion, 1%. Total market sales for the five products are estimated at $340 million on a trailing 12-month basis, and are expected to generate $40 to $50 million on an annualized basis.