Yet another acquisition agreement was recently announced in the
pharma sector. US based specialty pharmaceutical company
Par Pharmaceuticals Companies Inc.
) entered into an agreement with an affiliate of leading global
private equity firm TPG Capitals, whereby TPG will acquire Par
Pharma for $1.9 billion.
TPG specializes in leveraged buyouts, recapitalizations, joint
ventures, restructuring, etc. Some of its notable investments in
the healthcare sector include Aptalis Pharma, Biomet, IMS Health
and IASIS Healthcare.
Par Pharma represents strong growth prospects especially given
the focus on low cost healthcare solutions and growing demand from
an aging population. As of March 31, 2012, Par Pharma had 71
abbreviated new drug applications (ANDAs) filed with the US Food
and Drug Administration (FDA) representing more than $20 billion
combined branded product sales. These ANDA filings included 21
Terms of the Agreement
As per the terms of the agreement, TPG is offering Par Pharma
shareholders $50 in cash for each share of Par Pharma's common
stock. The offer price represents a premium of approximately 37%
over the July 13, 2012 closing share price, which was the last full
trading day before the announcement.
However, the agreement also permits Par Pharma's Board of
Directors to search for alternative superior proposals until August
24, 2012, from other bidders. Prospective suitors could include
other generic players or ex-US companies looking to strengthen
their presence in the US. If no alternative offer turns up, the TPG
deal is expected to go through in 2012.
We note that merger and acquisition activities continue to heat
up in the pharma/biotech sector. Over the last few weeks, major
deals have been announced including
) upcoming acquisition of
Amylin Pharmaceuticals, Inc.
) deal with
Human Genome Sciences, Inc.
We currently have a Neutral recommendation on Par Pharma. The
stock carries a Zacks #3 Rank (Hold rating) in the short run.
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