UPDATE: Horizon Pharma Announces the Purchase of Vidara Therapeutics for $660M in Stock, Cash
Horizon Pharma, Inc. (NASDAQ: HZNP) and Vidara Therapeutics International Ltd. (Vidara) today announced they have entered into a definitive agreement under which Horizon Pharma will acquire Vidara through a reverse merger for stock and cash valued at approximately $660 million. Horizon Pharma plc will be the name of the resulting company. Horizon Pharma plc will be organized under the laws of Ireland with a portfolio of four products marketed primarily in the United States. The proposed transaction has been unanimously approved by both companies' boards of directors. Pursuant to the agreement, Vidara will combine with Horizon Pharma, Inc. with approximately 74 percent of Horizon Pharma plc's ordinary shares to be exchanged for Horizon Pharma, Inc.'s common shares, with Horizon surviving the merger. The shareholders of Vidara will retain approximately 26 percent of Horizon Pharma plc and receive $200 million in cash, subject to certain adjustments.
Strategic and financial benefits of the transaction:
Accelerated transformation of Horizon to a profitable specialty pharma company; Expected pro forma combined, full year 2014 revenues of $250 to $265 million and EBITDA(1) of $65 to $75 million; Expanded revenue base to include Horizon Pharma's DUEXIS®, VIMOVO® and RAYOS® marketed in the U.S., Vidara's ACTIMMUNE marketed in the U.S. and Horizon's LODOTRA® marketed outside the U.S.; Tax efficient corporate structure enhanced to support Horizon's organic growth and acquisition strategy. "The addition of ACTIMMUNE complements our commercial business model focused on targeted promotion to primary care physicians and specialists," said Timothy P. Walbert, chairman, president and chief executive officer, Horizon Pharma. "The combined company would have a portfolio of four proprietary products and an international platform that builds on our strategy of organic growth and acquisitions. We look forward to working with the Vidara team to bring our companies together to accelerate the creation of shareholder value."
Vidara is a privately-held, profitable specialty pharmaceutical company with operations in Dublin, Ireland and the U.S. The company markets ACTIMMUNE, a bioengineered form of interferon gamma-1b, a protein that acts as a biologic response modifier, in the U.S. ACTIMMUNE is approved by the U.S. Food and Drug Administration (FDA) for use in children and adults with chronic granulomatous disease (CGD) and severe, malignant osteopetrosis (SMO). ACTIMMUNE is indicated for reducing the frequency and severity of serious infections associated with CGD and for delaying time to disease progression in patients with SMO. Vidara recorded net sales of ACTIMMUNE of $58.9 million in 2013.
Transaction Terms In the proposed transaction, stockholders of Horizon Pharma, Inc. would own approximately 74 percent of Horizon Pharma plc and Vidara shareholders would own approximately 26 percent. Stockholders of Horizon Pharma, Inc. would receive one ordinary share of Horizon Pharma plc in exchange for each share of Horizon Pharma, Inc. common stock they own at closing. The combined company is expected to have a capitalization of approximately 100 million basic and 122 million fully diluted shares. Horizon Pharma plc would be a U.S. Securities and Exchange Commission reporting company, and its ordinary shares would trade on NASDAQ. The transaction will be taxable to the Horizon Pharma, Inc. U.S. stockholders.
Horizon Pharma has secured a $250 million bridge loan commitment from Deerfield Management Company, L.P., pending execution of its final financing plans.
(1) EBITDA excludes certain one-time transaction expenses.
Leadership Timothy P. Walbert, chairman, president and chief executive officer of Horizon Pharma, Inc. would be chairman, president and chief executive officer of Horizon Pharma plc and current officers of Horizon Pharma, Inc. would be officers of Horizon Pharma plc. Vidara executives would join Horizon Pharma plc in important leadership and management roles within the combined company.
Approvals The transaction, which has been approved by the boards of directors of both companies, is subject to approval by the stockholders of Horizon Pharma, Inc. and the satisfaction of customary closing conditions and regulatory approvals, including antitrust approval in the U.S. The transaction is expected to close mid-year 2014.
Certain affiliates of Horizon Pharma, Inc., who hold approximately 20 percent of the outstanding shares of common stock of Horizon Pharma, Inc., have agreed to vote in favor of and take necessary actions on matters related to the transaction described in this press release. Shareholders who hold >95% of the shares of Vidara have agreed to vote in favor of and take necessary actions to approve the transaction.
Advisors Citigroup Global Markets Inc. is acting as lead financial advisor to Horizon Pharma and JMP Securities LLC is acting as co-financial advisor for the transaction. The Company's legal advisors are Cooley LLP and McCann FitzGerald (Dublin) and its tax advisors are KPMG LLP. Horizon Pharma's advisors for the related financing transaction are Citigroup Global Markets Inc. and Cowen and Company.
Vidara's financial advisor for the transaction is Lazard Middle Market and its legal advisors are Mayer Brown LLP, Burke Warren McKay and Serritella PC and A&L Goodbody (Dublin).
Note Regarding Use of Non-GAAP Financial Measures Horizon provides non-GAAP net income (loss) and net income (loss) per share financial measures that include adjustments to GAAP figures. These adjustments to GAAP exclude non-cash items such as stock compensation and depreciation and amortization, non-cash interest expense, and other non-cash charges. Certain one-time or substantive events may also be included in the non-GAAP adjustments periodically when their magnitude is significant within the periods incurred. EBITDA, or earnings before interest, taxes, depreciation and amortization, is also used and provided by Horizon as a non-GAAP financial measure. Horizon believes that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of Horizon's financial performance. The non-GAAP financial measures are included with the intent of providing investors with a more complete understanding of operational results and trends. In addition, these non-GAAP financial measures are among the indicators Horizon's management uses for planning and forecasting purposes and measuring the Company's performance. These non-GAAP financial measures should be considered in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, non-GAAP financial measures used by other companies.
Conference Call Today at 8:00 AM ET At 8:00 a.m. Eastern Time today, Horizon's management will host a conference call and live audio webcast to review the transaction and related matters. The live webcast and a replay may be accessed by visiting Horizon's website at http://ir.horizon-pharma.com. Please connect to the Company's website at least 15 minutes prior to the live webcast to ensure adequate time for any software download that may be needed to access the webcast. Alternatively, please call 1-888-338-8373 (U.S.) or 973-872-3000 (international) to listen to the conference call. The conference ID number for the live call is 16063209. Telephone replay will be available approximately two hours after the call. To access the replay, please call 1-855-859-2056 (U.S.) or 404-537-3406 (international). The conference ID number for the replay is 16063209. An archived version of the webcast will be available for at least one week on the investors section of the Horizon Pharma's website at www.horizonpharma.com.
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