September 8, 2015 / 11:16 AM / 2 years ago

Concordia Healthcare boosts drug portfolio with $1.9 billion deal

3 Min Read

(Reuters) - Canada's Concordia Healthcare Corp (CXRX.O) (CXR.TO) said it would buy Amdipharm Mercury Ltd from private equity firm Cinven for $1.9 billion, boosting its portfolio of drugs to 200 from 20 and giving it a foothold in overseas markets.

Amdipharm Mercury, created with the merger of Mercury Pharma and Amdipharm in 2012, buys off-patent drugs from big pharma companies such as Novartis AG NOVN.VX, GlaxoSmithKline Plc (GSK.L) and Abbott Laboratories (ABT.N) and sells them in about 100 countries.

Amdipharm's 190 drugs are used in several difficult-to-treat conditions including hyperthyroidism, depression and bacterial infections.

Concordia's shares fell nearly 10 percent on the Toronto Stock Exchange after the deal, the biggest in the company's history. The stock has more than doubled in value this year.

Amdipharm is Concordia's second acquisition this year as the Canadian company tries to gain scale through acquisitions, much like its larger rival Valeant Pharmaceuticals International Inc (VRX.TO).

Concordia CEO Mark L Thompson called the acquisition a "powerful cash-machine" that would help the company with future deals.

The deal is expected to boost Concordia's sales to about $870-$920 million in 2015 on a pro-forma basis, of which about $530-$560 million is expected to come from Amdipharm.

"Previously Concordia was looking to acquire U.S. assets. Now they can look to acquire on a global basis ... that's the main thing they are gaining here," Laurentian Bank Securities analyst Joseph Walewicz said.

The company spent $1.2 billion in cash earlier this year to buy some assets of privately held Covis Pharma Holdings SARL.

Including debt, the Amdipharm deal is valued at $3.3 billion. The transaction also includes performance-based payments of up to $220 million, payable in cash in the fourth quarter of 2016.

Cinven is expected to hold a 19.9 percent stake in Concordia after the transaction closes, the Canadian drugmaker said.

The deal, which is expected to close in the fourth quarter of 2015, will immediately add to Concordia's adjusted earnings.

Goldman, Sachs & Co is the financial adviser to Concordia and Sullivan & Cromwell LLP, Fasken Martineau DuMoulin LLP and Simmons & Simmons LLP are its legal advisers.

Jefferies and Rothschild are Cinven's financial advisers and Clifford Chance, Torys LLP and Jones Day its legal advisers.

Concordia's U.S.-listed shares were down about 10 percent at $76.

Reporting by Amrutha Penumudi in Bengaluru; Editing by Kirti Pandey and Saumyadeb Chakrabarty

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