$500 million deal brings together two generic-drug companies with complementary strengths in Europe and the U.S.Iceland”s Actavis Group, a generic-pharmaceuticals company, Friday agreed to acquire Amide Pharmaceutical, a Little Falls generics maker, for $500 million in cash and an additional payment of $100 million payable over two years subject to performance.
The deal brings together two companies with complementary strengths in Europe and the U.S. Upon closing Actavis is expected to have a cash balance of approximately $40 million.
Founded in 1983, Amide develops and manufactures 67 products in tablet and capsule forms. It also has a strong development pipeline of 30 products and 12 Abbreviated New Drug Applications (ANDAs) pending approval with the U.S. Food and Drug Administration. Amide expects to have 10 new product approvals this year.
The company employs 200 people at its New Jersey facility that is currently capable of manufacturing 1.5 billion tablets and capsules per year. In addition, it is building a new plant, which will increase annual manufacturing capacity to 6 billion to 8 billion tablets.
In the year ended December 31, 2004, Amide had revenues of $106.7 million, with earnings before interest, tax, depreciation and amortization of $53.2 million. Profit before tax was $52.5 million.
The acquisition will provide Actavis with a platform from which to launch future products into the U.S. The enlarged group will have more than 500 products on the market and minimal overlap between the respective products. The combined company has 136 products in in-house development and is expected to file at least 15 ANDAs this year.
Actavis expects the acquisition to be 45% to 50% accretive to profit before tax and 30% to 35% accretive to earnings per share in the first full year.
On completion, the operations of Actavis in the U.S. will be combined with those of Amide. Divya C. Patel, Amide”s president, will become a member of the Actavis executive board.
Actavis will partially finance the acquisition through a preemptive placing in Iceland of its own treasury shares (6.6%) and of newly issued shares to raise a total of $313.77 million in market value. The balance of the consideration for the acquisition will be financed with a new 5-year syndicated credit facility of $627.39 million.
Banc of America Securities acted as exclusive financial advisor to Amide in connection with the transaction.