Private investment firms buy up drug companies with the idea of cashing out at some point with a big profit. TPG Capital, unable to find a buyer willing to pay its $3 billion-plus asking price for Aptalis Pharma, is now going the IPO route, with a filing made Thursday that would allow TPG to extract at least part of its investment in the New Jersey company.
TPG picked up Aptalis--then Axcan Pharma--for $1.3 billion in 2008. It combined it with Eurand in 2011 in a $590 million deal. It put the maker of gastroenterology and cystic fibrosis drugs up for sale this year but with what some saw as a hefty price, $3 billion to $4 billion, given its revenues. According to Thursday's IPO filing, the Bridgewater, NJ-based company had revenues of $687.9 million in fiscal 2013, which ended Sept. 30. Its best-selling drug, ulcer treatment Carafate, generated $145 million for the year, and Zenpep, a treatment for exocrine pancreatic insufficiency, pumped out $141 million.
There were reportedly some lookers, like Elan ($ELN), Forest Laboratories ($FRX) and Sun Pharma, but they also had other considerations. In July, Elan agreed to a buyout from Perrigo ($PRGO) in an $8.6 billion deal. Forest's new CEO, Brent Saunders, is in cost-cutting mode, this month announcing a job-whacking plan aimed at saving half a billion dollars. Sun is known in the industry for looking for bargains.
The IPO filing is for $500 million, but it makes clear that is a place-setting figure and will most likely change. It points out that the drugmaker has seen a compound annual growth rate of 20.9% in the last few years, with revenue expanding to $687.9 million in 2013 from $470.4 million for fiscal year 2011. It had a profit of $86.9 million in fiscal 2013, which followed losses of $12 million and $191.6 million in the two preceding years.
The company refinanced its debt in November and made a $399.5 million distribution to shareholders, restricted shareholders and holders of restricted stock units and certain holders of stock options. Bloomberg reports that TPG holds a 91% stake.