Perrigo is a global over-the-counter pharmaceutical manufacturer. Photo via fb.com
Perrigo has signed a definitive agreement to sell its right to the royalty stream from the global net sales of a drug used in treating multiple sclerosis.
Dublin-based Perrigo, which operates its North American base in Allegan, said yesterday it signed the divestment agreement for Tysabri with RPI Finance Trust, an affiliate of New York-based Royalty Pharma.
The transaction is valued at up to $2.85 billion.
It is composed of $2.2 billion in cash at closing and up to $650 million in potential milestone payments based on future global net sales of Tysabri in 2018 and 2020.
Under the terms of the agreement, Royalty Pharma will acquire all of Perrigo's rights to receive Tysabri royalty payments from and after January 1, 2017, which Perrigo has under an agreement with Cambridge, Massachusetts-based Biogen.
The transaction is expected to close within 30 business days and is subject to certain specified closing deliverables.
Perrigo acquired the rights to the Tysabri royalty stream through the company's 2013 acquisition of Elan Corporation.
John Hendrickson, Perrigo CEO, said the divestment decision is a result of Perrigo's review of strategic alternatives for the Tysabri royalty stream, which the company announced last November.
Hendrickson said the “significant upfront cash component” will allow Perrigo to “de-lever our balance sheet, which supports our investment-grade financial policy and better positions Perrigo to pursue our strategic plan.”
“This transaction also furthers our stated strategy to enhance our portfolio and focus on our consumer-facing and Rx businesses,” Hendrickson said. “This is a meaningful step in our portfolio review process, and I am confident that the board and management will continue to focus on creating value for shareholders."
Morgan Stanley & Co. acted as sole structuring agent and lead financial advisor to Perrigo for the transaction. Evercore also acted as a financial advisor to the company. Wachtell, Lipton, Rosen & Katz is acting as legal advisor to Perrigo.
J.P. Morgan Securities and Bank of America Merrill Lynch acted as financial advisors to Royalty Pharma, and Goodwin Procter and Matheson acted as legal advisors to Royalty Pharma.