Denmark’s Nycomed is to acquire Bradley Pharmaceuticals of the USA for $346 million in a bid to expand its presence in the dermatology sector.
Nycomed, which is in the process of moving its headquarters from Denmark to Switzerland, will pay $20 per share, having come out on top in an auction to buy Bradley. The offer represents a 25% premium on the latter’s closing price of $16.00 on October 29, though the announcement of the deal pushed Bradley’s share price up to $19.66, a rise of nearly 23% on the previous day.
Nevertheless, Nycomed’s offer falls somewhat shy of a $360 million bid made in May by a group of investors led by Bradley’s chief executive Daniel Glassman. The firm then set up a special committee of independent directors to evaluate its strategic alternatives, with Deutsche Bank acting as its financial advisor, and after “an extensive auction process”, the committee, which did not include Mr Glassman, recommended the Nycomed offer.
The transaction needs the approval of holders of a majority of the outstanding shares of Bradley's common and Class B stock, voting together as one class. Mr Glassman owns most of the Class B shares so the merger is not necessarily a done deal.
Nevertheless, there was no dampening Nycomed’s enthusiasm which intends to merge Bradley with the PharmaDerm and Fougera divisions of its US specialty business. Chief executive Hakan Bjorklund said that the deal “provides us with a unique opportunity to strengthen our dermatology expertise in the USA with successful products and capabilities that match ours perfectly". He added that the acquisition also “enables us to gain critical mass in the dermatology market and provides significant momentum for further add-on investments”.
Bradley is comprised of Doak Dermatologics, specializing in therapies for dermatology and podiatry, Kenwood Therapeutics, which focuses on gastroenterology, respiratory and obstetrics and gynaecology brands. It also operates a generics unit, A Aarons, and total group sales for the second quarter were down 13% to $32.2 million. Bradley posted a loss of $1.7 million, compared to net income of $4.6 million for the same period last year.
The transaction is expected to be completed in the first quarter of 2008, and if approved, it should boost revenues at Nycomed which last December splashed out 4.22 billion euros to acquire Altana Pharma. The firm’s sales and earnings are currently driven by the gastrointestinal drug pantoprazole but patent expiries from 2009 are going to dramatically reduce income from that source.