Health Care Deal News: Spotlight on Pharmaceuticals

In the largest transaction of the month, and one that certainly was not a surprise, GlaxoSmithKline (NYSE: GSK) finally prevailed in its pursuit of Human Genome Sciences (NASDAQ: HGSI), but it took them three months to secure the deal.  GSK is paying $14.25 per share, or $3.6 billion, which represents a 99% premium to the closing price the day before GSK made its unsolicited bid on April 19 for $13.00 per share.  Obviously, it was worth holding out for an extra $300 million or so, but we wonder how much was spent by both sides on legal and banking fees during the three months in search of another possible suitor at a higher price.

HGSI, a biopharmaceutical company based in Maryland, has several products, with principal ones including BENLYSTA for systemic lupus erythematosus and raxibacumab for inhalation anthrax.  Annualized revenues are just $188.5 million.  GSK is projecting cost synergies of up to $200 million, and somehow the deal will be accretive to 2013 earnings.  Lazard and Morgan Stanley advised GSK; Goldman Sachs and Credit Suisse Securities advised HGSI.

The other significant transaction announced in mid-July was private equity firm TPG’s agreement to purchase Par Pharmaceutical Companies (NYSE: PRX) for $1.9 billion.  TPG is paying $50.00 per share, representing a 37% premium to the prior-day closing price.  Par is the sixth largest generic drug company ranked by sales, which were $964.7 million on a trailing 12-month basis, and EBITDA was about $192 million.

After the announcement, Par’s shares traded as high as $52.33 as speculation mounted that higher bids would be forthcoming, given the desire of other companies to expand in the U.S. generic pharmaceuticals market.  Looks like it was not to be.  JP Morgan advised Par, while Bank of America Merrill Lynch, Deutsche Bank and Goldman Sachs advised TPG..........Want to read more? Click here for a free trial to The Health Care M&A Information Source and download the current issue today