AMAG, Perrigo Acquire Privately-held Lumara Health For Up To $1.11 Bln

(RTTNews) - Privately-held drug maker Lumara Health, Inc. agreed Monday to be acquired in two separate deals with AMAG Pharmaceuticals, Inc. (AMAG) and drugmaker Perrigo Co. plc (PRGO) for a total consideration up to $1.11 billion, including a contingent consideration of up to $350 million.

The deals, approved by the boards of directors of all three companies, are expected to be completed by the end of 2014. The AMAG deal has also been approved by the stockholders of Lumara Health.

Chesterfield, Missouri-based Lumara Health is a specialty pharmaceutical company committed to advancing the health of women throughout the stages of their lives, with a particular focus on maternal health.

Lumara's fast-growing product Makena was granted 7-year orphan drug exclusivity in February 2011 and is the only U.S. Food and Drug Administration approved product indicated to reduce the risk of preterm birth in women who are pregnant with one baby and who have delivered one preterm baby spontaneously in the past.

Waltham, Massachusetts-based AMAG agreed to acquire Lumara's maternal health business in a cash and stock deal valued at about $675 million, including $600 million in cash and $75 million in stock. AMAG will also make an additional contingent consideration of up to $350 million based on achievement of certain sales milestones.

"This is a truly transformative transaction that will propel AMAG into a profitable, high-growth multi-product specialty pharmaceutical company positioned for what we expect to be continued revenue and bottom-line growth, further business diversification and shareholder value creation," AMAG President and CEO William Heiden said in a statement.

The deal provides AMAG a strategic commercial entry into the women's health segment. The deal is expected to result in projected combined 2015 product sales of $350 million for AMAG. It is also projected to be immediately accretive to adjusted earnings per share, with cost synergies of at least $20 million per year.

Lumara's commercial operations will function as a separate business unit within AMAG, reporting directly to William Heiden. Following the closure of the deal, current Lumara Health executives will continue to manage the unit.

AMAG said it intends to fund the deal with a combination of cash on hand, about $75 million of newly issued common stock and $340 million in committed term B financing from Jefferies Finance LLC.

The deal will also see AMAG acquiring about $250 million in tax net operating loss carryforwards (NOL's) from Lumara, which will be combined with AMAG's NOL's which totaled more than $258 million as of December 31, 2013.

Additionally, Dublin-based Perrigo agreed to acquire a portfolio of women's healthcare products from Lumara for $82 million in cash in a deal that adds a new therapeutic category to it. The acquired portfolio, including Vaginal Creams Clindesse and Gynazole-1 as well as estradiol transdermal spray Evamist, generated more than $15 million in annual net revenues.

"I'm excited to announce the addition of these women's healthcare products to Perrigo's Specialty Rx portfolio. Perrigo is uniquely positioned to realize potential manufacturing synergies given the fact that we currently manufacture two of the three products included in this portfolio for Lumara," Perrigo Chairman, President and CEO Joseph Papa stated.

The deal is expected to be modestly accretive to adjusted earnings per share and slightly dilutive to reported earnings per share in fiscal year 2015 and accretive to ROIC in fiscal 2016.

In Monday's regular trading session, AMAG is currently trading at $26.84, up $3.66 or 15.79% on a volume of 1.60 million shares, while PRGO is trading at $149.40, down $1.32 or 0.88% on a volume of 0.16 million shares.