10th Feb 2016 07:30
LONDON (Alliance News) - FTSE 100-listed Hikma Pharmaceuticals PLC said Wednesday that it has agreed a lower price for its acquisition of Roxane Laboratories Inc and Boehringer Ingelheim Roxane Inc from German pharmaceutical company Boehringer Ingelheim.
This is as a result of new information having been received from Hikma in relation to the financial performance of Roxane in 2015, following the publication of Hikma's prospectus regarding the acquisition in January.
As a result of this information the two companies have agreed to reduce the purchase price, and Hikma will now pay USD647 million in cash instead of the USD1.18 billion it had originally agreed, although it will still additional issue 40 million shares to Boehringer as part of the consideration at a price of 2,350 pence per share. Hikma shares closed on Tuesday at 1,995.00p.
Hikma said that, following further due diligence, it now expects Roxane's revenue for 2015 to come in lower than it had previously anticipated, which it attributed to higher-than-expected rebates.
It now expects Roxane's revenue for 2015 to only be slightly higher than 2014, and for 2016 to be lower than in 2015. As a result, Hikma now expects the acquisition to be slightly dilutive to its adjusted earnings per share in 2016.
It also lowered its expectations for Roxane's 2017 revenue, now expecting revenue between USD700 million and USD750 million, below its previous estimate of between USD725 million and USD775 million.
Despite Hikma's reduced expectations for Roxane's revenue, Hikma reiterated that it expects the acquisition to be strongly additive to its adjusted earnings per share from 2017, its first full year of ownership, onwards.
"We remain very excited about the strategic and financial value of this acquisition, which will transform our position and scale in the US generics market. Whilst there will be a short term impact related primarily to higher than expected product rebates, we have agreed a reduced purchase price to reflect this, and we remain confident in our outlook for the business," said Chief Executive Officer Said Darwazah in a statement.
"Roxane's impressive, differentiated product portfolio and pipeline, along with its manufacturing capacity and technological capabilities will create a strong platform for sustainable long-term growth and substantial value for shareholders," Darwazah added.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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