Biopharmaceutical firm Cephalon, Inc. (CEPH) Monday said it signed an agreement to acquire privately-held Swiss-based pharma firm Mepha AG and its subsidiaries, for CHF 622.5 million, or about US$590 million. Further, the company withdrew its full year 2010 guidance.
Mepha manufactures and markets over 120 products in 50 countries and recognized sales of about CHF 400 million in 2009. The company has achieved compound annual growth rates of over 13% in sales over the last five years. Mepha also has a pipeline of nearly 50 chemical entities planned for launch over the next five years.
Cephalon will purchase Mepha from the Merckle family-owned Mepha Holding AG. The deal is expected to close in the next 10-12 weeks.
According to Cephalon, Mepha has specific expertise in innovative dosage formulations and markets both generic and branded generic products. The acquisition is expected to diversify Cephalon's business mix and doubles the size of its international business. The deal will also provide an attractive platform to launch current and future products in new, developed and emerging markets, the drug maker said.
The acquisition is expected to be accretive to Cephalon's adjusted earnings per share in 2010. The company said it would update its 2010 guidance when it reports full year 2009 financial results on February 11. In the interim, the company withdraws its full year 2010 guidance issued on October 27, 2009.
While announcing the third-quarter results, Cephalon said it expects adjusted net income of $495 - $510 million for 2010, and adjusted net income per common share of $6.50 - $6.70.
On average, 25 analysts polled by Thomson Reuters expect the company to earn $6.26 per share in 2010 with estimates ranging between $5.84 and $6.62 per share. Analysts' estimates typically exclude special items.
Commenting on the deal, Frank Baldino, Jr., chairman and CEO of Cephalon, said, "The addition of Mepha will transform our international business overnight, expanding our ability to serve global markets and reach patients in new territories for the first time. With this deal, we now serve all three types of pharmaceutical markets, proprietary branded, generic and branded generic. We believe this balance will increase the growth and stability of our business."
Deutsche Bank Securities Inc. served as exclusive financial advisor to Cephalon.
CEPH closed Friday's regular trade at $63.84, down from the prior close of $64.57, on 1.43 million shares.
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