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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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