Horizon Pharma, based in Ireland, will acquire all of the issued and outstanding shares of California-based Hyperion Therapeutics’ common stock for $46 per share in cash, or approximately $1.1 billion on a fully diluted basis.
The offer represents a premium of about 35% to Hyperion's volume-weighted average price for the trailing 60 days. The proposed transaction has been unanimously approved by both companies' boards of directors.
"The Hyperion acquisition will expand and diversify our product portfolio by adding two complementary orphan disease products, Ravicti and Buphenyl, and leverage as well as expand the existing infrastructure of our orphan disease business," said Timothy P. Walbert, chairman, president and CEO, Horizon Pharma. "This transaction will be immediately accretive to adjusted EPS and we expect the contribution of Ravicti and Buphenyl in 2016 will add approximately $100 million to our adjusted EBITDA, including cost synergies contributing greater than $50 million. Additionally, this acquisition further accelerates our near- and long-term sales and adjusted EBITDA growth and provides significant value for both Horizon and Hyperion shareholders."
There are several strategic and financial benefits of the transaction, including:
The number of Horizon's products increases from five to seven, with the addition of Ravicti and Buphenyl to Horizon's orphan business unit, providing additional revenue diversification
It leverages Horizon's orphan business unit, offering attractive revenue and operating synergies
Expected 2016 adjusted EBITDA of approximately $100 million from the acquired business with expected cost synergies of more than $50 million.
Ravicti and Buphenyl are medicines for people with urea cycle disorders (UCDs), a collection of inherited metabolic disorders, which affect approximately 2,100 people in the U.S. with approximately 1,100 diagnosed. A marketing authorization application has been filed for European marketing of Ravicti. The prevalence of UCD is similar in Europe and other international markets.
Net sales of Ravicti and Buphenyl for Q4 2014 and full year 2014 were $30.8 million and $113.6 million, respectively.
The acquisition is structured as an all cash tender offer, followed by a merger in which each remaining untendered share of Hyperion common stock would be converted into the $46 per share cash consideration paid in the tender offer.
Horizon has entered into agreements with certain stockholders of Hyperion, including certain members of the Hyperion management team and certain funds affiliated with members of the Hyperion board of directors, pursuant to which each of these stockholders has agreed to tender the Hyperion common shares owned of record or beneficially by such stockholder, which in the aggregate represent approximately 21% of the outstanding Hyperion common shares as of the date of the agreements.
The transaction is anticipated to close in the second quarter of 2015.
