Daily Management Review

$5.2 Billion Purchase Deal As Agrees To Buy Drug Ingredients Maker Patheon


05/16/2017




$5.2 Billion Purchase Deal As  Agrees To Buy Drug Ingredients Maker Patheon
As Thermo Fisher Scientific Inc looks to become a one-stop shop for contract drug development and manufacturing, the company has said that it would buy Dutch drug ingredients maker Patheon NV.
 
A premium of about 35 percent to Patheon's Friday close is represented by the offer price of $35 per share. Just shy of the offer, Patheon's shares were trading at $34.60.
 
Research, clinical trial and production services to the biopharmaceutical industry is provided by Thermo Fisher which is the world's No. 1 maker of scientific instruments. From regulatory consulting to making drug ingredients and finished medicines, a very wide range of services are offered by Patheon.
 
The global contract development and manufacturing market, which the company estimates is worth about $40 billion, is fragmented at present and the Patheon's drug manufacturing abilities will help Thermo Fisher grab a bigger slice of the fragmented market, the company hopes as drugmakers increasingly vie to shave costs and clinical trial times.
 
"Thermo Fisher already had a developing and strong position in clinical trial manufacturing and now expands that arm into drug manufacturing, which is likely to highlight its growing presence in the market of bioproduction and bioprocessing," Leerink analysts wrote in a client note.
 
Saying it would merge with inVentiv Health Inc in a $4.6 billion deal to help it win contracts with large pharma companies, the contract research space is in the midst of a wave of consolidation with INC Research Holdings Inc last week.
 
A purchase price of about $7.2 billion is represented by the Patheon deal, including debt. About $1.9 billion in revenue last year was generated by Patheon, which went public last July.
 
Jefferies analysts said that the acquisition follows a difficult start to its public life even though the company – Patheon, has manufactured more U.S. Food and Drug Administration approved products than any peer.
 
The deal will immediately add to Thermo Fisher's adjusted profit by 30 cents in the first full year after close and is expected to be completed by the end of 2017.
 
Thermo Fisher has entered into agreements with affiliates of JLL Partners and Royal DSM, whose holdings represent about 73 percent of Patheon shares, under which they will tender their shares in the transaction.
 
Wachtell, Lipton, Rosen & Katz is serving as legal counsel and Goldman Sachs & Co is acting as financial adviser to Thermo Fisher. Skadden, Arps, Slate, Meagher & Flom LLP is its legal counsel and Morgan Stanley & Co is Patheon's financial adviser.
 
(Source:www.reuters.com) 






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