17th Jun 2024 11:29
(Alliance News) - Hikma PLC's acquisition of assets from Denmark's Xellia Pharmaceuticals ApS is a sensible financial and strategic move, analysts on Monday said.
Hikma is a London-based pharmaceuticals company with operations in Jordan. Xellia Pharmaceuticals, is a Copenhagen based specialist in anti-infective treatments and other critical care therapies.
Hikma has agreed to buy parts of Xellia's US finished dosage form business and assets, including a commercial portfolio and pipeline of differentiated products, a manufacturing facility in Cleveland, Ohio, sales and marketing capabilities, and an R&D centre in Croatia.
Hikma will pay USD135 million in cash, plus an additional up to USD50 million that is subject to the achievement of agreed regulatory and commercial milestones.
Hikma said the deal supports the long-term growth of its injectables business and diversifies its US portfolio and pipeline, adding a range of ready-to-use products.
The acquisition will add eight approved and marketed injectable products to Hikma's US portfolio and 11 pipeline products, the company noted.
The deal will be neutral to core earnings in the first 12 months and accretive thereafter, with meaningful longer-term benefits.
Upon closing, the current Xellia in-market products will contribute around USD75 million in revenue to Hikma on an annualised basis.
Chief Executive Riad Mishlawi said: "This acquisition will add significant scale to our US operations and will enhance our US injectable manufacturing capabilities and portfolio by adding complex technologies. I am confident that this transaction will deliver significant future value to our injectables business, supporting growth over the medium term."
Stifel said the bolt-on deal makes both financial and strategic sense.
"Strategically, it strengthens Hikma's injectables business, particularly in its core US market and provides increased R&D capabilities, an area that new CEO Riad Mishlawi has identified as requiring bolstering. The deal is also expected to be modestly earnings enhancing after the first 12 months," Stifel commented.
Liberum agreed. "This looks like a sensible bolt-on acquisition, adding products to the injectables division and perhaps more importantly another US manufacturing facility," the broker stated.
Liberum noted the 13.5x earnings before interest and tax multiple being paid by Hikma looks a little high "but it is hard to tell without knowing more about the pipeline and details of any the synergies that Hikma may be able to extract by bringing manufacturing in house."
Echoing the above comments, Citi said the deal was a "sensible bolt-on for US Injectables".
Citi, Liberum and Stifel all have a 'buy' rating on Hikma.
Shares in Hikma rose 0.3% to 1,963.00 pence in London on Monday.
By Jeremy Cutler, Alliance News reporter
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