French drugmaker Ipen set to acquire Merrimack’s asset for ~$1billion

While the deal will boost Ipen’s cancer drug portfolio, Merrimack’s shareholders will receive a special dividend as an outcome of the deal.

France-based drug manufacturer Ipsen SA, has disclosed it will be acquiring some assets from its U.S. peer Merrimack Pharmaceuticals Inc, including its drug which treats pancreatic cancer, Onivyde, for up to $1 billion.

Subject to approval for Onivyde in the U.S, Ipsen is likely to pay $575 million for the acquisition and upto $450 million more if the deal comes through.

The deal could work Merrimack since it could utilize the funds to develop new compounds which target cancers of the pancreas, and lungs. For Ipsen, the deal will boost its portfolio on endocrinology, which has been its traditional focus.

The deal will provide Ipsen the exclusive commercial rights for Onivyde in the United States, which currently is routed through Shire Plc for exclusive rights other than the U.S, and with PharmaEngine Inc for Taiwan.

Ipsen has stated it will also be acquiring Merrimack’s manufacturing and commercial assets.

Merrimack’s shareholder will receive a $1.54 special dividend.

The acquisition will be funded by Ipsen’s existing lines of credit, including cash. Although the deal is likely to dilute its 2017 profit earnings, its operating margins are likely to get boosted in 2018, as a result of the deal, said Ipsen.

Dechert LLP and MTS Health Partners LP acted as Ipsen’s advisers on the deal, while Credit Suisse Securities (USA) LLC and BofA Merrill Lynch acted as Merrimack’s advisers.

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