Covis Group to Acquire AMAG Pharmaceuticals in $647 Million Deal
Under the terms of the deal, Covis will pay $13.75 per share, or about $498 million, on a fully diluted basis and about $647 million on an enterprise basis. It also includes debt obligations that are expected to be assumed or repaid net of cash. This is a 46% premium of AMAG’s stock price as of September 30.
“AMAG’s category-leading treatments are strong strategic complements to our existing therapeutic portfolio,” said Michael Porter, Covis’ chief executive officer. “Through this combination, we believe we will be able to unlock value for all of our stakeholders, employees and patients through the effective and efficient management of these products, coupled with our two companies’ longstanding commitment to expanding patient access to therapy and putting patient interests first.”
AMAG has two commercial products. One is Makena (hydroxyprogesterone caproate injection) to decrease the risk of preterm birth in women with a singleton pregnancy who have a history of singleton spontaneous preterm birth. The other is Feraheme (ferumoxytol injection) for the treatment of iron deficiency anemia (IDA) in adults who are intolerant to oral iron or do not respond to it or who have chronic kidney disease.
On August 6, at its second-quarter financial report, AMAG indicated total revenues for the second quarter of $52.8 million, with $29.6 million from Feraheme and $22.3 million from Makena. It reported an operating loss of $7 million and an adjusted EBITDA loss of $1.7 million.
As part of the deal, Covis plans to enter into an amended and restated credit facility with its current lenders where they will receive up to a $460 million senior-secured incremental term loan and a $55 million secured revolver. The Covis Debt Financing, along with equity commitments from Covis’ equity sponsor, will be leveraged to pay the cash purchase price for the deal and repay any of the existing AMAG debt that that is not assumed. It will be added to Covis’ current $450 million term loan facility.
“In the beginning of 2020, AMAG announced that the company had undertaken a strategic review of our product portfolio and strategy, the guiding principles of which included driving near- and long-term profitability and enhancing shareholder value,” said Scott Myers, chief executive officer of AMAG.
Myers went on to say, “This strategic review resulted in the company pursuing and accomplishing the divestiture of its women’s health assets, and other efforts to streamline and strengthen the core business to position AMAG for the future. Following this initial transformation, our board of directors and management team, together with independent legal and financial advisors, thoroughly evaluated the transaction with Covis as well as other strategic options and concluded that it represents the most compelling opportunity for shareholders, providing them certain and immediate cash value. We believe Covis is the right partner with AMAG, especially in light of Covis’ shared commitment to ensuring that our therapies will reach patients in need. We are confident the work we’ve done will continue to thrive under Covis’ leadership.”