The Japanese brewery giant Kirin is planning to take a majority stake in one of the country’s leading drugmakers, Kyowa Hakko Kogyo in a deal that could be worth almost $2.7 billion.
Kirin Holdings Co wants to merge its Kirin Pharma division with Kyowa Hakko which has accepted the offer. Under the terms of the proposed deal, the former firm will offer 1,500 yen per Kyowa Hakko share to acquire a 27.95% stake, or almost 112 million shares. The offer represents a 25% premium to the latter’s closing price last Thursday.
Kirin Pharma will then conduct a share swap to take 177.24 million new shares in Kyowa Hakko, boosting its stake in the drug maker to 50.1% which, if all goes to plan, will value the deal at 300 billion yen, or around $2.64 billion. The merger is expected to be completed on October 1 next year and the new entity will be called Kyowa Hakko Kirin.
Kirin Holding’s president Kazuyasu Kato told reporters that “we aim to be a Japanese company that is strong in R&D and can vie with the world's top firms", noting that it will have revenues of about 200 billion yen. He added that the new entity will look to generate 80 billion yen in operating profit by 2011, compared with 42.6 billion yen in combined earnings last year.
The deal makes sense for Kirin which has been suffering from dwindling beer sales and the firm has recently spoken about its desire to boost its presence in the pharmaceuticals sector. Kirin Pharma specialises in immune disorder and infectious disease treatments as well as anaemia, kidney disease and cancer drugs.
Kyowa Hakko’s lead products are the anti-allergy drug Allelock (olopatadine) and the anticancer agent Navelbine (vinorelbine) and its US subsidiary recently submitted a New Drug Application to regulators for KW-6002 (istradefylline), its investigational compound for Parkinson's disease.