AMAG Pharmaceuticals, Inc., a specialty pharmaceutical company, has entered into a definitive agreement to acquire Cord Blood Registry (CBR), the world's largest stem cell collection and storage company serving pregnant women and their families, for $700 million. The acquisition of CBR would expand AMAG's suite of maternal health offerings and add a high-margin business with complementary commercial capabilities and attractive future growth opportunities to the AMAG portfolio.

CBR owns a state-of-the-art storage facility that houses more than 600,000 preserved umbilical cord blood and tissue stem cell units, which represents more than half of all privately stored cord units in the US1 CBR also partners with leading academic institutions that conduct clinical trials focused on evaluating the use of stem cells for regenerative medicine applications in diseases and conditions that have no cure today, including autism, cerebral palsy and paediatric stroke. To date, CBR has helped more families than any other cord blood company use their privately banked cord blood for established and investigational treatments.

In 2014, CBR generated pro forma revenue of approximately $126 million and adjusted EBITDA of $45 million. CBR has historically driven double-digit growth of its base of units and adds more new clients per year than its three largest competitors combined. Pro forma revenue from storage fees accounted for nearly 50% of CBR's total pro forma revenue in 2014 providing a predictable and sustainable base for potential future growth. AMAG is currently projecting 2015 pro forma revenue to be in line with or slightly above 2014 levels.

"CBR is a strong strategic fit for our maternal health business and will advance our strategy to pursue differentiated products in growing specialty markets," said William Heiden, chief executive officer of AMAG. "CBR is the most recognized stem cell banking brand among healthcare providers and is the top choice for families who choose to store cord blood, not only for their known clinical uses today, but also for their broader potential future utility. Moreover, CBR's sophisticated, consumer-driven marketing capabilities offer a compelling opportunity to reach a broader population of expectant mothers who may benefit from our product offerings in the maternal health space, including Makena."

Mr. Heiden continued, "We look forward to welcoming the CBR team to AMAG and are excited about our ability to strengthen our maternal health business platform, while bolstering our efforts to serve patients and their families."

"Combining CBR with AMAG presents exciting opportunities for both companies," said Geoff Crouse, chief executive officer of CBR. "CBR is poised for continued commercial success and future growth with our leading consumer healthcare expertise and the ongoing stem cell research studies in regenerative medicine. We look forward to being part of a company that has a track record of operational excellence and accelerating CBR's growth strategy as a part of AMAG's broader maternal health platform."

Newborn stem cells have been used for more than 20 years in patients with over 80 serious diseases, including congenital diseases and those that present in childhood. Since 2005, 27 states, representing approximately 75 per cent of the US population, have passed some form of cord blood banking education legislation requiring that information be provided to pregnant women regarding all of their medically appropriate cord blood options. Despite the increase in research discoveries and clinical trial data on stem cells, as well as consistent growth of cord blood storage in the US, stem cells are currently collected from fewer than five percent of all US births.

"As modern medicine advances, cord blood stem cells will continue to be an important resource in harnessing the body's own potential to heal itself. Because a person's own stem cells can be infused back into that individual without being rejected by the body's immune system, cord blood stem cells have become an increasingly important focus of regenerative medicine research," said Mahendra Rao, MD, PhD, vice president for regenerative medicine at The New York Stem Cell Foundation Research Institute, and a founding member of CBR's Scientific & Medical Advisory Board. CBR established the Scientific & Medical Advisory Board in February 2015 to provide guidance to the company regarding the latest scientific developments in stem cell research.

The transaction is expected to further diversify AMAG's revenue base, be immediately accretive to adjusted EBITDA and earnings, and result in expense synergies of approximately $15 million annually. CBR's revenue consists of upfront processing revenues for newly stored units, as well as a high-margin recurring revenue based on cumulative stored units. CBR's growing base of installed units provides for an increasing mix of revenue from storage fees. The larger and more diversified forecasted revenues that we expect as a result of this transaction are projected to allow AMAG to achieve a lower overall cost of capital, with terms that provide more flexibility and borrowing capacity to consummate future transactions.

The addition of CBR's complementary commercial capabilities, which include digital and social media direct-to-consumer education and awareness initiatives that offer an effective way to reach pregnant women, as well as a sales force that calls on the nation's busiest obstetricians and hospital labor and delivery units, will help expand AMAG's reach in the maternal health market. A combined and expanded maternal health sales effort at AMAG will provide greater coverage of obstetricians which, along with CBR's advanced consumer targeting and marketing expertise, will drive growth of Makena and CBR, and enable even stronger collaboration with healthcare providers and the broader maternal health community.

The transaction has been unanimously approved by AMAG's and CBR's boards of directors. Closing of the transaction is subject to customary conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. It is anticipated that the transaction will close in the third quarter of 2015. Following the close of the transaction, Crouse will continue to lead the CBR business, and AMAG intends to name other CBR executives who will be joining AMAG in the near future.

AMAG has secured $800 million in committed debt financing for the transaction from Jefferies Finance LLC and Barclays Capital which, in addition to AMAG's existing balance sheet cash, is sufficient to finance the transaction, repay AMAG's senior secured term loan and pay fees and expenses related to the transaction.

Deutsche Bank and Jefferies LLC served as financial advisors to AMAG on the transaction. AMAG's legal advisor is Goodwin Procter LLP. CBR's and GTCR's legal advisor is Kirkland & Ellis LLP. Jefferies Finance LLC and Barclays are serving as initial lenders and lead arrangers for the committed debt financing, and Jones Day served as their legal advisor.

As a high-growth specialty pharmaceutical company, AMAG Pharmaceuticals uses its business and clinical expertise to bring medical therapies and other innovations to market that provide clear benefits and improve people's lives.

Cord Blood Registry (CBR) is the world's largest newborn stem cell collection and storage company. Founded in 1992, CBR is entrusted by parents with the storing of more than 600,000 cord blood and tissue units.