LEO Pharma Repurchases Product Rights From Warner Chilcott for $1 billion Cash Payment
Wed, 09/23/2009 - 5:29am
WarnerChilcott plc and LEO Pharma announced today that, in exchangefor a one-time cash payment of $1.0 billion to Warner Chilcott, LEO Pharma isre-acquiring Warner Chilcott's exclusive product licensing rights in theUnited States to its topical psoriasis treatments Taclonex , Taclonex Scalp ,Dovonex as well as rights to all products in LEO's development pipeline, andacquiring all inventories of the products. "Since 2003, Warner Chilcott has enjoyed a strong partnership with LEOPharma," said Roger Boissonneault, President and Chief Executive Officer ofWarner Chilcott plc. "This transaction allows Warner Chilcott to concentrateon new strategic initiatives, including the acquisition and integration of theProctor & Gamble Pharmaceuticals business, and enables LEO Pharma to expandbeyond research and development and into the commercialization of products inthe United States." "The acquisition of the psoriasis dermatology portfolio from WarnerChilcott provides LEO with a unique stepping stone and we have incorporated anaffiliate to be headquartered in New Jersey. The deal is LEO Pharma's largestever and is indicative of our commitment to geographic expansion and growth inareas including the USA. We have valued the collaboration with Warner Chilcottand look forward to establishing LEO as a leading company within the AmericanDermatology market, armed with one of the strongest pipelines withindermatology. We expect to start operations in the beginning of 2010," saidGitte Aabo, Chief Executive Officer of LEO Pharma. Under the terms of the agreement, Warner Chilcott has agreed to continuedistribution and promotion of Taclonex , Taclonex Scalp and Dovonex for LEOPharma until December 31, 2009 and to perform certain transition services forLEO Pharma for up to one year. The repurchase of the product rights and inventories for $1.0 billion,which is expected to close today, will result in a one-time gain for WarnerChilcott of approximately $450 million after-tax, or approximately $1.79 pershare based on 251.3 million shares outstanding. Net cash proceeds, aftertaxes triggered by the gain, are expected to be approximately $980 million.Warner Chilcott is using a portion of the cash generated by the sale to repayand terminate its existing senior secured credit facilities ($480 million ofwhich was outstanding on September 23, 2009). In addition, the proceeds willreduce the amount of financing necessary in connection with Warner Chilcott'spending acquisition of Procter & Gamble Pharmaceuticals.