Drug maker Hikma Pharmaceuticals (LON:HIK) has bought US specialty generics company Roxane Laboratories from Boehringer Ingelheim for US$2.65bn.
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Jordan-based Hikma, which makes branded and non-branded generics and injectable drugs, said the acquisition would make it the sixth largest company in the US by revenue.
The transaction is the latest in a string of deals in the generics sector, where economies of scale are important because of the highly competitive nature of the market.
The deal comes one day after Israeli pharmaceutical giant Teva snapped up the generic drugs business of Allergan (NYSE: AGN – news) for $40.5 billion, consolidating its position as a world leader in generics.
“We won’t be the size of Teva and other big companies, but we will be bigger than many other companies that were ahead of us over the last five years”, Hikma Chief Executive Said Darwazah told Reuters.
India’s Lupin also agreed to buy U.S. peer GAVIS Pharmaceuticals for $880 million this month.
Analysts at Shore Capital said: “From a period where we thought that Hikma may have thought of divesting the non-injectables business, it is clear that management has a long-term commitment, aided substantially by this acquisition”.
Hikma was to pay $1.18bn and issue 40m new shares, about 16.721% of the company, to Boehringer. The generics division is its smallest, accounting for about 15 percent of revenue. At a share valuation of £23.50 per share, the deal was worth $2.65bn in total.
It has also agreed to make milestone payments of up to $125 million.
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Assuming closing of the deal in the fourth quarter of 2015, the deal is expected to add to adjusted earnings per share in 2016, the first full year, and very strongly add to adjusted earnings per share from 2017 onwards.
