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In a move that continues the consolidation trend in the generic drugs market, Hospira Inc. agreed to acquire specialty injectables company Mayne Pharma Limited (Melbourne, Australia) for $2 billion.
Lake Forest, IL (Sept. 20)-In a move that continues the consolidation trend in the generic drugs market, Hospira Inc. (www.hospira.com) agreed to acquire specialty injectables company Mayne Pharma Limited (Melbourne, Australia, www.maynepharma.com) for $2 billion. Hospira's offer of AUD$4.10 (US $3.08) cash per share is a 32% premium over Mayne’s Sept. 18 closing price.
The acquisition will significantly increase Hospira’s global presence, doubling its international sales to 30% of the company’s total sales. According to an official company release from Hospira, the company will save $50 million by 2008 “through infrastructure optimization as well as improved supply chain, administrative, and other operational efficiencies.” Hospira Chief Executive Officer Christopher Begley said, “This combination will create the leading generic injectable pharmaceuticals company in the world.”
Despite enthusiasm about the deal, however, some analysts say problems could lie ahead for the companies. “What remains uncertain ‘is the overall integration of the deal, particularly since Hospira continues to face speed bumps of its own in separating itself from Abbott,” said Bank of America analyst Glenn Novarro in a recent Chicago Sun-Times article (1).
JPMorgan Securities Inc. analyst Taylor Harris said in a Chicago Business article, “Hospira has a lot on its own plate, nowhere more so than in some of the international markets where it will now have to deal with integrating a large new business” (2).
Mayne Pharma shareholders will vote on the proposal in early December.
1. F. Knowles, “Hospira Targets Mayne Pharma; Some Analysts Skeptical,” Chicago Sun-Times, Sept. 22, 2006, http://www.suntimes.com/business/67299,CST-FIN-hosp22.article, accessed Sept. 27, 2006.
2. M. Colias, “Mayne Deal a Quick Fix for Hospira’s Overseas Strategy,” Chicago Business, Sept. 21, 2006, http://chicagobusiness.com/cgi-bin/news.pl?id=22174, accessed Sept. 27, 2006.