Sweden’s Meda AB to Acquire Italy’s Rottapharm for $3.07 Billion

Meda AB, a specialty pharmaceutical company headquartered in Solna, Sweden, has agreed to acquire Rottapharm│Madaus, a specialty pharmaceutical company headquartered in Monza, Italy, for SEK 21.2 billion ($3.07 billion). The SEK 21.2 billion ($3.07 billion) consists of SEK 15.3 billion ($2.2 billion) in cash, 30 million Meda shares corresponding to a value of SEK 3.3 billion ($478 million), and a non-contingent deferred payment in January 2017 of SEK 2.6 billion ($377 million). Following completion of the transaction, Fidim s.r.l., the holding company of the Rovati family, who owns Rottapharm, will become the second largest shareholder of Meda with a 9% share.

Rottapharm focuses on prescription-reimbursed medications and so-called Cx products (clinically proven consumer healthcare products), which are high-margin, non-reimbursed, and prescribed or recommended by doctors and which little generic competition, according to company information. Rottapharm has a global footprint with a presence in 90 countries worldwide and generated revenues of EUR 536 million ($717 million), of which 75% is from Cx products.

“The acquisition of Rottapharm is an important step in creating a stronger, improved Meda,” said Jörg-Thomas Dierks, CEO of Meda, in a company statement. “Rottapharm is a preeminent specialty pharma company with highly differentiated brands and a leading position within Cx. The combined business will have an improved Rx / Cx balance and increased investment opportunities. This acquisition is in-line with our strategic priorities to execute value-accretive M&A, invest in consumer healthcare, and emerging markets.”

On a combined basis, Meda will  have approximately 60% of its revenues in prescription-drug segments and approximately 40% in Cx/OTC treatments. On pro forma basis of 2013 sales, approximately 17% of Meda’s sales will be in emerging markets, an increase of around 50%. Rottapharm's presence, with its own sales forces, in Southeast Asia, is complementary to Meda to provide additional opportunities to sell Meda's products in new geographic markets.

The acquisition is expected to yield approximately SEK 900 million ($130 million) per annum of cost synergies, with full effect in 2016. Synergies are anticipated to be driven by efficiencies in sales and marketing, administration, and research and development. The acquisition will be funded through a combination of new debt facilities, an equity issue with preferential rights to existing shareholders, and payment in Meda shares. The board of directors of Meda will call for an Extraordinary General Meeting to decide upon an equity issue with preferential rights to existing Meda shareholders. Subject to customary closing conditions, the deal is expected to close in the fourth quarter of 2014.

The deal does not include Rottapharm Biotech's research and development activities in innovative drugs. Rottapharm Biotech S.r.l. is entirely controlled by Fidim and will continue to pursue its strategic objectives in research, innovation, and development of new products in the biological and chemical sectors.

Source: Meda and Rottapharm

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