Reckitt Benckiser, Bristol-Myers sign $482M pact
New York biopharmaceutical company Bristol-Myers Squibb Co. announced Tuesday, Feb. 12, that it struck a collaboration agreement with Slough, U.K., healthcare and consumer products business Reckitt Benckiser Group plc worth $482 million.
By Thomas Zadvydas
TheDeal.com
February 12th, 2013 – Terms of the deal state that Reckitt Benckiser will pay Bristol-Myers $438 million up front for the exclusive rights to sell, distribute and market seven medicines primarily sold in Latin America for a three-year period.
The compounds are Picot, an antacid; Tempra, a pain reliever and fever reducer; Micostatin, an antifungal treatment; Graneodin, a cough and cold medicine sold primarily in Mexico; Dermodex, an anti-rash cream; Luftal, an anti-gas medicine; and Naldecon, a cold and flu symptoms treatment, sold mainly in Brazil.
“[The deal] increases our consumer healthcare capability in Latin America,” Reckitt Benckiser senior vice president Andraea Dawson-Shepherd said. “It’s a good set of brands.”
The assets had net revenue for the year ended Dec. 31 of $102 million, Reckitt said.
Bristol-Myers will retain responsibility for manufacturing all of the products covered by the collaboration during its terms. Reckitt Benckiser will purchase products from Bristol-Myers and pay royalties on product sales.
The deal also includes a $44 million payment of an option fee by Reckitt Benckiser to Bristol-Myers for the right to purchase the medicines outright at the end of the three-year term. The final purchase price would be based on average net sales during the two-year period before the closing of the acquisition. No manufacturing facilities will be transferred as part of the deal.
One banker sees the deal as a bet on the expanding middle class in the region with larger disposable incomes.
“Latin America is an [expanding] healthcare market,” said managing partner Gregg Blake of healthcare boutique Brocair Partners. “If you take Brazil for instance, a lot of people over the last 10 years have moved up into the wealthier economic classes.” Blake estimates the healthcare market in Brazil to stand at about $209 billion and the market in Mexico to be worth about $65 billion.
“And it’s growing,” he added.
Reports surfaced in January that Bristol-Myers was seeking a buyer for some of its brands in Mexico and Brazil worth as much as $750 million. The transaction is subject to customary closing conditions, including competition law clearance by authorities in Brazil and Mexico.
“Bristol-Myers Squibb has worked to focus its businesses around the world on innovative medicines in areas of high unmet medical need,” CFO Charles Bancroft said in a statement Tuesday.
Kevin Sheridan, Abid Rizvi and Dung Nguyen at Jefferies & Co. advised Bristol-Myers on the deal. David Fox, Daniel Wolf and Joshua Zachariah at Kirkland & Ellis LLP were legal counsel. Simon Smith, Siddhart Nahata, Susan Huang and Pedro Costa at Morgan Stanley advised Reckitt Benckiser, while Toby Myerson, Steven Williams, Chuck Googe and Andrew Gaines at Rifkind, Wharton & Garrison LLP were legal counsel.
Bristol-Myers didn’t return calls Tuesday.
Bristol-Myers shares fell 31 cents, or 0.84%, to $36.62, on Tuesday afternoon. Reckitt Benckiser shares closed up 27.16 pence, or 0.64%, to 4,262.16 pence, Tuesday afternoon in London.