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The transaction is set to be completed in the fourth quarter of 2019.
Mallinckrodt Pharamceuticals, a UK biopharmaceutical company, announced on Sept. 10, 2019 that it has entered into an agreement to sell BioVectra Inc., its contract manufacturing and development organization (CDMO) business and a wholly owned subsidiary, to H.I.G Capital, a private equity firm based in Miami, FL, for $250 million.
The agreement enables Mallinckrodt to capture future BioVectra growth potential through a fixed consideration of $175 million, consisting of an upfront payment of $135 million, a long-term note for $40 million, and contingent payments of up to $75 million. BioVectra will remain an active pharmaceutical ingredient supplier for Mallinckrodt's specialty brands business under a long-term arrangement.
"While we recognize the longer-term growth potential for BioVectra, we believe that the structure of this deal enables us to participate in the future success of the business, and therefore we see this sale as the best option for both Mallinckrodt and BioVectra moving forward," said Mark Trudeau, president and CEO of Mallinckrodt, in a company press release.
"We are excited to support BioVectra's exceptional leadership and highly dedicated employees," added Mike Gallagher, managing director at H.I.G. Capital, in the press release. "BioVectra demonstrates a tremendous ability to generate robust organic growth and utilizes a broad set of technical capabilities to deliver outstanding service and quality. They are completing major capital expenditure programs to significantly expand capacity, and the company is well positioned to capitalize on growing demand for their services."
The transaction is set to be completed in the fourth quarter of 2019 and will include all of BioVectra's sites in Prince Edward Island, Nova Scotia, Canada, as well as its employee base.