Health Care Deal News, December 8, 2014 - 10 Years of Medical Device M&A

 

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Week ending December 5, 2014: 

 

Recent Health Care M&A Deals

Acquirer

Target Price
Medical Devices    
BTG Plc PneumRx, Inc. $230 million
Pharmaceuticals    
Imprimis Pharmaceuticals, Inc. Park Compounding N/A
Eli Lilly and Company License to ZP-PTH N/A
Physician Medical Groups    
CRH Medical Corporation Gastroenterology Anesthesia Associates, LLC $58.6 million

 

 

Otsuka America Pays $3.5 Billion Cash for Avanir  

Otsuka Pharmaceutical Co.’s U.S. subsidiary, Otsuka America, Inc., is set to acquire Avanir Pharmaceuticals, Inc. (NASDAQ: AVNR) for $3.5 billion in an all-cash offer. Avanir is a biopharmaceutical company specializing in diseases of the central nervous system. Its main product is Nuedexta, which treats the neurologic disease pseudobulbar affect (PBA). Otsuka not only gains Nuedexta, but the late-stage investigational compound AVP-786 in clinical development to treat agitation associated with Alzheimer’s disease. Avanir shareholders will receive $17.00 for each share of AVNR stock they own, which some analysts declared was on the low side. Although lawsuits are common occurrences following many M&A announcements, the investigations have begun to determine if AVNR’s board of directors adequately shopped the company before agreeing to Otsuka’s price. 

 

Consolidation Is Just Beginning for Medical Devices Sector

The Medical Device sector is undergoing huge shifts this year. Consolidation is creating even bigger global leaders, while the mid-size and smaller manufacturers are merging to strengthen their product pipelines. Even a change in regulations regarding tax inversions hasn’t stopped the sector’s largest deal to date, between Medtronic (NYSE: MDT) and Covidien (NYSE: COV).  Through November 30th, we recorded 103 transactions in this sector and $84.1 billion in deal value. This is a banner year, no question. If the next Congress strikes down the 2.3% excise tax, 2015 could be even more interesting.

 

Medical Device Transactions, 2005 to 2014*

Year Deals Change  Dollars Change
2005 140 5% $42.1 billion 98%
2006 150 7% $53.3 billion 26%
2007 194 29% $58.2 billion 9%
2008 167 -14% $69.3 billion 19%
2009 177 6% $13.9 billion -80%
2010 185 5% $41.7 billion 200%
2011 175 -5% $65.8 billion 58%
2012 144 -18% $25.1 billion -62%
2013 103 -29% $11.9 billion -53%
2014* 103 0% $84.1 billion 608%

* = through Nov. 30. Source: The Health Care M&A Information Source, December 1, 2014

 

 

Eight CCRCs Change Hands, Twice

Health Care REIT (NYSE: HCN) sold eight CCRCs for $435 million to Senior Living Communities, which operates all eight, and one other in Indiana. The acquired communities, one rental and seven entrance-fee, are located in South Carolina (4), North Carolina (2) and one each in Georgia and Florida. Overall occupancy is 85.4% and the average age is 12 years. Health Care REIT had been receiving about $24.4 million in rent, representing a 5.6% yield on the sales price. It recognized a $95 million gain on the sale, which was part of a planned $625 million of divestitures slated for 2014. Senior Living Communities turned around and sold all eight CCRCs to National Health Investors, Inc. (NYSE: NHI), for $476 million. The higher price reflects a higher initial cash rent of $31 million, or a yield of 6.51%. 

 

Allena Pharmaceuticals Secures $25 Million Series B Financing

Specialty biopharmaceutical company Allena Pharmaceuticals, Inc., a specialty biopharmaceutical company focused on developing and commercializing non-systemic oral protein therapeutics to treat metabolic and orphan diseases, completed a $25 million Series B financing. The round was led by HBM Partners, joined by existing investors Frazier Healthcare, Third Rock Ventures, Bessemer Venture Partners and new investor Pharmstandard International. The financing enables Allena to advance its lead program to treat hyperoxaluria, ALLN-177, into Phase 3 development. The program recently began Phase 2 trials, and will add more Phase 2 trials in early 2015............Click here for a free trial to The Health Care M&A Information Source and download the current issue today.

 

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