Nichi-Iko Pharmaceutical Co. and Sagent Pharmaceuticals, Inc. have entered into a definitive merger agreement under which Nichi-Iko will acquire Sagent via an all-cash tender offer followed by a second-step merger, for a total consideration of approximately $736 million.
The acquisition price represents a premium of approximately 40.3% to Sagent''s closing price of $15.50 per share on July 8, 2016. The transaction, which has been unanimously approved by the Nichi-Iko and Sagent Boards of Directors, is expected to close in the second quarter of Nichi-Iko's fiscal year ending March 2017, subject to customary regulatory approvals.
The merger agreement contemplates an all cash tender offer for $21.75 per share (the Tender Offer Price), followed by a second-step merger in which all outstanding shares of Sagent common stock not tendered in the Tender Offer will be converted into the right to receive the same amount, in cash equal to the Tender Offer price. The Tender Offer is expected to commence within 15 business days from the date the merger agreement was signed, and will remain open for a minimum of 20 business days after its commencement. Subject to the terms and conditions of a support agreement, Vivo Capital, LLC (which holds approximately 19.8% of Sagent's outstanding shares), has agreed to tender their shares into the tender offer.
The acquisition brings together two leading companies in the generics market with highly complementary portfolios, creating stronger growth opportunities for each business. The transaction enhances Nichi-Iko's platform in the US market to commercialize its biosimilar product pipeline and increase its presence in injectables. Through the acquisition, Nichi-Iko will raise its profile in the domestic and international generics market and advance the company's goal of becoming a top 10 global leader in generics.
Sagent will benefit from Nichi-Iko's portfolio of both biosimilars under development and injectable products, further enhancing its competitiveness in the US market - the largest generic drug market in the world. The deal will also give Sagent access to Nichi-Iko's sophisticated manufacturing infrastructure and industry-leading quality control systems, and enable it to bring high quality, cost-effective generic medicines to more patients. No changes to Sagent's current operations are currently anticipated and Nichi-Iko expects that Sagent's current management team will continue to lead Sagent from its headquarters in Schaumburg, Illinois.
Yuichi Tamura, president & CEO of Nichi-Iko said, "The US market is a top priority for Nichi-Iko and we believe Sagent is an ideal partner to accelerate our international growth strategy. The company has a highly robust sales network, significant global relationships through its unique partner network, and an attractive portfolio of 55 products primarily in oncology, anti-infective, and critical care, of which 30% have a No. 1 or No. 2 market share. The combination will give us the opportunity to strengthen our international competitiveness, leverage our production capacity over a wider range of products, and accelerate development of our biosimilars business. We are looking forward to working with Sagent's talented management team and learning from what is clearly a highly skilled and productive workforce."
Sagent Pharmaceuticals CEO, Allan Oberman, said, "We are very pleased to be joining together with Nichi-Iko, Japan's generic pharmaceutical leader, which has a proven track record of business growth and generic market expertise. Both companies share a deep commitment to brand differentiation, product quality, and broad based business creativity. The combination will maintain Sagent's current operations and valued employees while providing accelerated expansion of our product offerings and accessibility to a robust pipeline of biosimilar pharmaceuticals. After thoroughly evaluating our strategic options, our board of directors has unanimously decided that this all-cash transaction is in the best interest of our stockholders. We are confident that Nichi-Iko is the ideal partner to help us push forward into our next stage of growth and solidify our position as a leading provider of affordable pharmaceuticals to the hospital and clinic market."
JP Morgan Securities Japan Co., Ltd. acted as financial advisor to Nichi-Iko, and Nishimura & Asahi, Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Hyman, Phelps & McNamara, P.C. acted as legal counsel to Nichi-Iko. Perella Weinberg Partners and Morgan Stanley & Co. LLC. acted as financial advisors to Sagent and Kirkland & Ellis LLP acted as legal counsel to Sagent.