Hikma Halves Cash Offer for Boehringer Ingelheim's Roxane, Will Pay $575 Million Less

Published: Feb 10, 2016

Hikma Halves Cash Offer for Boehringer Ingelheim's Roxane, Will Pay $575 Million Less
February 10, 2016
By Alex Keown, BioSpace.com Breaking News Staff

LONDON -- Jordan-based Hikma Pharmaceuticals reduced its offer to acquire Roxane Laboratories Inc. and Boehringer Ingelheim Roxane Inc. from Boehringer Ingelheim by nearly half after receiving lower than expected data about Roxane’s 2015 financial reports, the company announced.

These lower than expected financial reports caused Hikma’s board of directors to reevaluate the deal due to the numbers having “an impact on Roxane’s outlook for 2016 and 2017.” Hikma said it anticipates Roxane’s total revenue for 2017 will be between $700 million and $750 million, rather than the previous expectation of $725 million and $775 million for 2017.

Based on the new financial data the companies agreed to lower the upfront gross cash consideration by $535 million, Marketwatch reported this morning. Hikma adjusted its offering to “gross consideration of $647 million in cash as opposed to $1.18 billion,” the company said in a statement. The stock portion of the deal originally agreed upon will remain the same.

Boehringer told Reuters it confirmed the detail of Hikma's statement and that the revised deal was still "the right decision for both companies", but declined to provide any additional comment.

In July, Hikma announced it would buy Boehringer Ingelheim's U.S. specialty generic drugs business for about $2.65 billion in cash and stock to bolster its presence in the United States. The deal was expected to make Hikma the sixth-biggest generics provider in the United States. Hikma said it expects close to 20 launches from the Roxane pipeline in 2016 and 2017, including some potentially substantial market opportunities.

In addition, Hikma said it expects an “improved product mix in 2017, resulting from the successful commercialization of Roxane’s differentiated pipeline and the reduction in the supply of lower-margin products to Boehringer Ingelheim and its affiliates.”

“We remain very excited about the strategic and financial value of this acquisition, which will transform our position and scale in the U.S. generics market. Whilst there will be a short term impact related primarily to higher than expected product rebates, we have agreed a reduced purchase price to reflect this, and we remain confident in our outlook for the business. Roxane’s impressive, differentiated product portfolio and pipeline, along with its manufacturing capacity and technological capabilities will create a strong platform for sustainable long-term growth and substantial value for shareholders,” Said Darwazah Hikma’s, chief executive officer said in a statement.

In addition to the changing terms of the deal, Hikma was also successful in navigating its multiple dose vials of neostigmine methylsulfate injection, through U.S. regulatory hurdles. The UU.S. Food and Drug Administration approved the drug in January and Hikma said it anticipates a quick launch in the U.S. The injection is a cholinesterase inhibitor, used for reversal of the effects of non-depolarizing neuromuscular blocking agents after surgery.

In November, the FDA approved Hikma’s injectable phentolamine mesylate for the prevention or control of hypertensive episodes that may occur in patients with pheochromocytoma, as a result of stress or manipulation during preoperative preparation and surgical excision. The drug is indicated for the prevention or treatment of dermal necrosis.

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