Australia’s Mayne Pharma Group (the old FH Faulding) has suddenly become a $2 billion value company and one of the major players in the huge US pharmaceutical market.
That’s after it revealed yesterday that it will acquire generic products from Teva Pharmaceuticals for $US652 million, helping it propel into the top 2 in the American general oral contraceptives market.
To pay for this move, Mayne will raise $A601 million in a 1-for-1.725 rights issue and a share placement of $A287 million to fund the acquisition, it said in a statement yesterday.
Shares in the placement are to be issued at $1.50 each, with the shares issued in the rights issue priced at $1.28, a skinny 9.2% discount to Monday’s close.
Once completed this issue will boost the company’s market value by around 40% to close to $2 billion (meaning shareholders will have to pay up in the issue otherwise they face a substantial dilution of their stake).
“The acquisition substantially increases and diversifies Mayne Pharma’s earnings across more products, therapeutic areas, dosage forms and complex technologies,”Mayne’s chief executive, Scott Richards said in yesterday’s statement.
“The acquisition transforms Mayne Pharma’s generic products division into a top 25 player in the US retail generics market, diversifying Mayne Pharma’s earnings across a broad range of products, therapeutic areas and technologies."
According to Mayne, the acquired portfolio, which includes difficult-to-manufacture modified-release tablets and capsules, soft-gel capsules and transdermal patches, is expected to contribute sales of $US237 million in FY17 with gross margins greater than 50%.
Mayne Pharma said it is acquiring 37 products already approved for sale with a further five products under application for sale. It intends to transfer production of 11 of the products to its own units and continue to outsource the balance.
The focus of the acquired drug portfolio is on oral contraceptives, central nervous system and cardiovascular products, it said, with nearly 60% of the products approved for sale having two or less generic competitors.
The deal is the last of several large divestitures of US assets required by regulators for the approval of Teva’s planned $US40 billion acquisition of Allergan Plc’s generic drugs portfolio. Teva announced the proposed deal last July.
Teva’s rationalisation though has hit another Australian pharma stock hard in Mesoblast. Teva has walked away from a funding joint venture it had with Mesoblast, costing the Australian company millions of dollars in lost funding and share market value.
In all, Teva has agreed to sell assets to middle ranking companies such as Dr. Reddy’s Laboratories, Impax Laboratories, Sagent Pharmaceuticals, and Cadila Healthcare, as well as a number of private companies, and ending funding deals like the one qith Mesoblast.
In Europe, Teva is in the process of finding buyers for assets including its UK and Irish generics business, all of which are expected to be done by the end of the year.
Mayne’s shares were on a trading halt on Tuesday and will recommence trading tomorrow, after the institutional offer closes.
