Concordia CEO Mark Thompson noted that the acquisition of Donnatal represents an important advancement in the execution of the company’s legacy product strategy, providing substantial and sustainable revenue going forward.
"In addition, we believe that Donnatal will have a significant and positive impact on Concordia’s net earnings and EBITDA," Thompson added,
Donnatal comes in two formulations: immediate release Donnatal tablets, and immediate release Donnatal Elixir, a fast acting liquid. In addition to the drug, Concordia is acquiring the sales and marketing infrastructure related to the product.
The company has agreed to acquire Donnatal for $200m in cash and an aggregate of 4,605,833 common shares of Concordia.
The common shares issuable have an aggregate value of approximately $65.3m based on the closing trading price of the company’s common shares on the Toronto Stock Exchange on 18 March 2014, and represent approximately 16.19% of the company’s outstanding common shares on a non-diluted basis (approximately 14.99% on a fully-diluted basis) after giving effect to the acquisition.
Revive Pharmaceuticals will also be entitled to have a representative nominated to the board of directors of the company provided that it maintains a certain shareholding level in the company. Completion of the acquisition is subject to customary closing conditions (including approval of the TSX), and acceptable financing.
Management anticipates that the deal will close in the second quarter of 2014. Management plans to pay for the cash component of the acquisition through a combination of available cash and debt financing.
Accordingly, the company has entered into a commitment letter with GE Capital, Healthcare Financial Services and its affiliated entities. Pursuant to the commitment letter, GE has agreed to provide a secured credit facility having a principal amount of up to $195m, consisting of a $170m term loan and a $25m operating line (credit facility).
The credit facility will be secured by the assets of the company and the assets of its subsidiaries. The credit facility is subject to a number of customary conditions, including entering into definitive documentation.
During 2013, Donnatal generated revenues of approximately $49.8m.
Torreya Partners and GMP Securities are acting as financial advisors to Concordia. Lazard Middle Market is acting as Revive Pharmaceutical’s financial advisor.