Monday, Sciele Pharma, Inc. (SCRX) said it entered into a definitive agreement to be acquired by Japanese pharmaceutical manufacturer Shionogi & Co., Ltd. (SGIOF.PK) for total equity price of about $1.1 billion. The deal, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvement Act and other customary conditions, is expected to close in the fourth quarter of 2008.
Under the agreement terms, Shionogi will buy shares of Atlanta, Georgia-based pharmaceutical company Sciele through a cash tender offer at a price of $31 per share. The acquisition will be completed through a merger, where the remaining shares would be converted into the right to receive the same $31 cash per share price paid in the tender offer.
The transaction, approved by the Board of Directors of both Shionogi and Sciele, is subject to the tender of a majority of Sciele stock on a fully diluted basis on the date of purchase. In the subsequent merger, Shionogi's newly establishing wholly-owned subsidiary, Tall Bridge, Inc, will be merged with and into Sciele. The new entity, Sciele Pharma, Inc., will be an indirect wholly-owned subsidiary of Shionogi, and will continue operations in Atlanta as a standalone business unit. The company noted that there is no financing condition to the tender offer or subsequent merger.
With the acquisition, Shionogi will get an immediate expansion in the U.S. market, significantly increasing its commercial presence and product pipeline in the country. The company noted that the deal will not result in any reduction of Sciele employees, and is anticipated to enhance Shionogi's earnings starting in the fiscal year 2010.
The Shionogi- Sciele combination follows recent deals by other Japanese drug manufacturers with a view to strengthen their overseas business. In May, Japan's largest drug maker Takeda Pharmaceutical Co. Ltd. (TKPHY.PK,TKPHF.PK) acquired Cambridge, Massachusetts-based Millennium Pharmaceuticals, Inc. (MLNM) for about $8.8 billion through a cash tender offer of $25 per share.
In June, Japanese pharmaceutical firm Daiichi Sankyo Co. (DSKYF.PK) agreed to acquire a majority stake in India's leading drug company Ranbaxy Laboratories (RBXLF.PK, RBXZF.PK) for up to US$4.6 billion, as part of its strategy to strengthen its prescription drug business overseas.
Commenting on the Sciele acquisition, Dr. Isao Teshirogi, President & Representative Director, Shionogi, said, "This acquisition will give us a strong platform in the United States to launch products that are currently in the Shionogi and Sciele pipelines. Our therapeutic areas complement each other and broaden our product portfolio and R&D pipeline. This transaction is expected to generate additional growth for Shionogi in the near-term and long-term."
In the transaction, Shionogi's financial advisor was Goldman Sachs, and Davis Polk & Wardwell served as legal advisor.
In the transaction, UBS Investment Bank served as financial advisor to Sciele, while Paul, Hastings, Janofsky & Walker LLP was its legal advisor.
SCRX closed Friday's regular trading session at $19.27, down $0.39 or 1.98%, on a volume of 584 thousand shares.
SGIOF.PK last traded on July 15 at $18.75.
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