A Canadian drugmaker with quite the track record for buyouts has struck a far-reaching deal that it says will enhance its M&A strategy. No, it's not serial dealmaker Valeant ($VRX)--but it may have Valeant worried.
Ontario-based Concordia Healthcare ($CXR) Tuesday announced a pact to buy Amdipharm Mercury from European private-equity firm Cinven for about $3.5 billion, including debt. It's a transaction Concordia says will position it for long-term revenue and EPS growth, padding the company's adjusted EPS by more than 35% in the first full year.
But more importantly, the transaction represents a "key milestone and pivotal turning point" in the company's strategy that gives it a "platform to take our business to the next level," CEO Mark Thompson said in a statement. Adding Amdipharm's commercial reach--its sales span more than 100 countries--and diverse lineup of 190-plus products will help Concordia become a "leading, international pharmaceutical company" with a business model that should help it focus on bulking up further.
And that's what could have Concordia butting heads with its Canadian neighbor Valeant sooner rather than later, Cormark Securities analyst David Dean told Bloomberg in April. Concordia will "begin competing with even larger companies for assets that would have been out of reach in the past," he said after the company's acquisition of Switzerland's Covis.
And some analysts see "a lot more opportunity left" in Concordia than Valeant, StoneCastle Investment Management fund manager Bruce Campbell told the news service.
Valeant, for its part, hasn't stopped inking its own deals, but how much value it'll be able to drum up through its recent accords remains to be seen. Recently, it agreed to spend $1 billion on Sprout Pharmaceuticals, maker of controversial--and questionably effective--female libido drug Addyi, and last week it said it would pay AstraZeneca ($AZN) more than $100 million upfront for exclusive rights to a psoriasis candidate Amgen ($AMGN) bailed on in May over safety worries. And before that, it bought up the assets of bankrupt biotech Dendreon--including foundering cancer vaccine Provenge.
"Valeant continues to execute, obviously, but their opportunity set has shrunk," Thompson told Bloomberg earlier this year. And Concordia? As the CEO figures, people see the drugmaker "as a company that's got a lot of runway in front of it."
- read Concordia's release
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