Emergent BioSolutions Inc. has entered into a definitive agreement to acquire Cangene Corp. in an all-cash transaction valued at $222 million. The acquisition is part of Emergent’s growth plan to diversify its revenue mix, adding commercial product sales. The transaction and is expected to close in 1Q14.
Cangene, a specialty therapeutics company focused primarily on biodefense applications, as well as infectious disease, hematology and transplantation, has manufacturing and plasma collection facilities in Winnipeg, Manitoba, Baltimore, MD, and a sales and marketing office in Philadelphia, PA. Cangene has three specialty products in the U.S. Strategic National Stockpile: BAT (Botulism Antitoxin (Equine) Heptavalent), VIGIV (Vaccinia Immune Globulin Intravenous (Human)), and AIGIV (Anthrax Immune Globulin Intravenous), and four approved specialty products: WinRho SDF (Rho(D) Immune Globulin Intravenous (Human)), HepaGam B (Hepatitis B Immune Globulin (Human) Injection), VARIZIG (Varicella Zoster Immune Globulin (Human)), and episil.
The acquisition expands Emergent’s manufacturing capabilities with Cangene’s fill/finish CMO business. Cangene’s contract manufacturing operations provide fill/finish services supporting more than 20 approved products worldwide and yielded contract manufacturing revenue of approximately $33 million for its fiscal year, which ended July 31, 2013.
“The acquisition of Cangene is consistent with our stated growth plan to acquire revenue generating products that leverage our core capabilities,” said Daniel J. Abdun-Nabi, president and chief executive officer of Emergent BioSolutions. “The addition of Cangene is expected to accelerate our growth driven by a substantially expanded biodefense franchise, a portfolio of approved specialty therapeutics sold through an established commercial infrastructure, and fill/finish manufacturing capabilities with growing contract revenues. This acquisition represents an important step in advancing Emergent’s leadership in specialty pharmaceuticals and positions us to drive significant growth in shareholder value.”
During a conference call, company executives remarked that the company may move third-party sourced projects into Cangene's Baltimore fill/finish capacity, including the BioThrax biodefense product. They also indicated that there is additional room to grow the CMO business in the Baltimore facility. Mr. Abdun-Nabi cited the CMO operations as a “standalone, revenue-generating business” during the call. Executives said it was too early to tell about potential layoffs or other synergies. Cangene employs approximately 500 people.
Emergent has secured debt financing from Bank of America Merrill Lynch along with PNC Bank and J.P. Morgan Chase Bank, N.A., totaling $225 million. The company also anticipates there will be approximately $35 million of cash from Cangene at closing.