Amneal Pharmaceuticals, Impax Laboratories To MergeBy
Amneal Pharmaceuticals, a Paterson, New Jersey-based generic-drug manufacturer, and Impax Laboratories, a Hayward, California-based specialty pharmaceutical company focused on controlled-release and specialty generics, have agreed to merge, to create what the companies say will be the fifth largest generic-drug company in the US.
The combined company, to be named Amneal Pharmaceuticals, is expected to have pro forma 2017 net revenue ranging from $1.75 billion to $1.85 billion and pro forma adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of approximately $600 million to $650 million in 2017 and $700 million to $750 million in 2018, each including $80 million to $120 million of annualized cost savings within the first full year of close. The transaction is expected to generate $200 million in annual cost savings within three years following the close of the transaction. The combined company will be headquartered in Bridgewater, New Jersey.
The combined company will have a generics portfolio with approximately 165 differentiated product families marketed in all dosage forms. In addition to its existing commercial product portfolio, the combined organization will have a pipeline with more than 300 products either filed with the US Food and Drug Administration (FDA) or in active stages of development with approximately 150 pending abbreviated new drug applications filed with the FDA and 165 projects in active stages of development. Nearly half of all pipeline products are exclusive first-to-file, first-to-market or other high-value opportunities with three or fewer competitors estimated at the time of launch, according to the companies. The combination also adds a foundation for commercial entry into biosimilars with two in-licensed products, one filed, and one near-term filing opportunity in development. The combined company is expected to manufacture and distribute its products from a strengthened global supply chain supporting capabilities across all dosage forms with R&D and manufacturing sites in the US, India, and Ireland.
“This transaction is financially compelling as we expect the combination to be accretive to Impax’s standalone adjusted per share earnings in the first 12 months and generate double-digit growth in revenue and adjusted EPS over the three years following the close of the transaction,” said Paul Bisaro, president and chief executive officer of Impax, in a company statement. “We expect to achieve annual cost synergies of approximately $200 million within three years. The anticipated strong cash flows from the combined company allow for the repayment of debt and the ability to meaningfully invest in our business.”
Under the deal, Amneal shareholders will own approximately 75% of the combined company while Impax shareholders will own approximately 25%. Under the agreement, prior to the closing of the transaction, Amneal shareholders will receive non-economic, voting shares of Amneal Pharmaceuticals, Inc. and will be able to exchange, at or following closing, their membership units in Amneal Pharmaceuticals for class A common shares of Amneal Pharmaceuticals, Inc.
To lead the new company, Amneal’s founders and Co-Chief Executive Officers, Chirag Patel and Chintu Patel, will serve as co-chairmen of the combined company’s board of directors. Paul Bisaro will serve as chief executive officer of the combined company, and Bryan Reasons, senior vice president, finance and chief financial officer of Impax, will serve as chief financial officer. This leadership team will be supported by the combined company’s nearly 6,500 employees.
The transaction agreement has been unanimously approved by the Boards of Directors of Amneal and Impax and is supported by the management teams of both companies. The transaction is expected to close in the first half of 2018, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals and Impax shareholder approval. Amneal Pharmaceuticals received the requisite approval from its members for the transaction.
The new combined company’s Board of Directors is expected to be comprised of 11 members, six of whom will be appointed by Amneal Holdings, including Chirag Patel and Chintu Patel, and five of whom will be appointed by Impax, including Impax Chairman, Bob Burr, who is expected to be appointed lead independent director, and Paul Bisaro. Other members of the Board will be announced in the coming months.
Source: Impax Laboratories