Hikma acquires Roxane Laboratories, transforming its position in the US generics market

Hikma Pharmaceuticals PLC the fast growing multinational pharmaceutical group, today announces that it has agreed to acquire Roxane Laboratories Inc. and Boehringer Ingelheim Roxane Inc. (together, "Roxane"), from Boehringer Ingelheim ("Boehringer").  Roxane is a well-established US specialty generics company with a highly differentiated product portfolio and best-in-class R&D capabilities. 

Under the terms of the acquisition, on closing of the transaction Hikma will pay gross consideration of US$1.18 billion in cash and will issue 40 million new Hikma shares to Boehringer (representing approximately 16.71 per cent. of Hikma's issued share capital immediately following closing and admission).  Based on an agreed issue price for the new Hikma shares of £23.50 per share and the US:GBP exchange rate of 1.56:1, the aggregate value of the gross consideration payable on closing is approximately US$2.65 billion.  Hikma has also agreed to make contingent cash payments of up to $125 million, subject to the achievement of certain performance milestones.

Transaction highlights

  · Transforms Hikma's position in the US generics market, establishing Hikma as the sixth largest company by 
revenue

·     Adds significant breadth to Hikma's US portfolio, bringing 88 highly differentiated products in specialised and niche segments of the market, including oncology, respiratory, extended release and controlled substances

· Enhances Hikma's pipeline adding 89 R&D projects, including 57 Paragraph IV products, 13 of which are first-to-file opportunities

· Creates sustainable long-term growth potential, adding Roxane's highly experienced R&D team with a successful track record of bringing new and differentiated products to market

·    Adds a best-in-class manufacturing facility with technologically complex formulation and alternative dosage form capabilities, including modified release solid orals and high potency formulations

· Boehringer's approximate 16.71% equity stake reflects a shared conviction in the future growth potential of the Hikma Group and allows Boehringer to focus on growing its global core businesses

· Targeting Roxane revenue of $725 million to $775 million in 2017 and an EBITDA margin of around 35% over the medium-term

· Expected to be accretive to adjusted[2] earnings per share ("EPS") in 2016 and very strongly accretive to adjusted EPS thereafter

Said Darwazah, Chief Executive Officer of Hikma commented:
"This transaction has significant strategic value for us, transforming our position and scale in the US generics market.  Roxane's impressive portfolio, attractive pipeline and R&D expertise, focusing on higher value, niche and differentiated products, will create a platform for sustainable long-term growth.  The acquisition also significantly expands our manufacturing capacity and technological capabilities.  Roxane has an excellent team of highly skilled employees and we are very excited about the value they will bring to Hikma.

I am also very pleased to be further strengthening our relationship with Boehringer Ingelheim, building on the acquisition of Bedford Laboratories which we made in 2014.  Their shared belief in the growth potential the Hikma Group is reflected in the equity stake that they are taking."

 Michael Raya, Chief Executive Officer of West-Ward, Hikma's wholly-owned subsidiary in the US, said:
"Roxane is highly complementary to our existing US business.  Today we are a market leader in generic injectables with a large and increasingly differentiated product portfolio.  The acquisition of Roxane will significantly strengthen our non-injectables business, bringing a broad and diversified non-injectables portfolio, strong R&D capabilities and well-invested, state-of-the-art manufacturing facilities.  With this acquisition, we will transform our US operations, becoming the sixth largest US generics provider and ensuring we have the ability to continue our strong trajectory of growth."

 Professor Andreas Barner, Chairman of the Board of Managing Directors of Boehringer Ingelheim commented:
"This is a great opportunity for Roxane to continue to build on its position in the global generics market as part of a fast growing company that has a primary focus on generics.  Boehringer is confident that this transaction can better support the already successful Roxane business to realise its growth potential, domestically and internationally.  Through this agreement, Boehringer Ingelheim will have a vested interest in Hikma and its significant potential, while focusing on growing our global core businesses as a research-driven pharmaceutical company."