Lundbeck inks definitive agreement to acquire Chelsea Therapeutics

Purchase price values Chelsea at up to $7.94 per share, or $658 million on a fully diluted basis

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VALBY, Denmark and CHARLOTTE, N.C.—H. Lundbeck A/S and Chelsea Therapeutics International, Ltd. have established a definitive agreement under which Lundbeck will acquire Chelsea, a deal that Lundbeck expects to be dilutive to cash flow and EBIT in 2014, cash flow accretive in 2015 and earnings accretive in 2016.
Per the terms of the agreement, Lundbeck will commence a tender offer for all outstanding Chelsea shares, with Chelsea shareholders to receive an upfront payment and contingent value rights. The total potential consideration will be up to $7.94 per share, or $658 million on a fully diluted basis. The purchase price represents a 59-percent premium over the closing prices of Chelsea’s shares on May 7, the day before the agreement was made public. The consideration consists of $6.44 per share in cash, or approximately $530 million, on a fully diluted basis, in addition to CVRs that may pay up to a total of an additional $1.50 if NORTHERA reaches certain commercial milestones in the years 2015 to 2017. The per-share price represents a 29-percent premium over the closing share price on May 7.
“I believe this offer represents an attractive offer to the stockholders of Chelsea and is consistent with Lundbeck’s strategic and disciplined approach to acquisitions,” Ulf Wiinberg, president and CEO of Lundbeck, commented in a statement. “The proposed strategic acquisition of Chelsea — and the launch of its lead therapy, NORTHERA — aligns with Lundbeck’s core strengths in addressing rare and challenging neurological disorders. As a company committed to people living with brain disorders, we are uniquely positioned to make NORTHERA available to those who need it most.”
Chelsea’s board of directors has unanimously approved the transaction, which is subject to the tender of a majority of the company’s outstanding shares to the tender offer and customary regulatory approval. Lundbeck will acquire any shares not tendered into the offer via a merger at the same share price consideration as the tender offer, with the merger to be effected as soon as possible after the tender offer closes. The transaction has an expected closing date of Q3 2014.
Through this transaction, Lundbeck will gain access to NORTHERA, which was approved just this February by the U.S. Food and Drug Administration (FDA) for the treatment of symptomatic neurogenic orthostatic hypotension (NOH). NORTHERA represents the first and only drug approved by the FDA that can effect symptomatic benefit in adults with NOH caused by primary autonomic failure (Parkinson’s disease, multiple system atrophy and pure autonomic failure), dopamine beta hydroxylase deficiency and non-diabetic autonomic neuropathy. The drug is expected to launch in the second half of this year.
“This transaction provides attractive and certain upfront value to our stockholders, and enables them to participate in the potential commercial upside of NORTHERA.  Lundbeck’s expertise in commercializing rare disorder CNS products will enable a rapid and successful launch of NORTHERA into the U.S. market and ultimately will provide added benefit to patients suffering from NOH,” Joseph G. Oliveto, president and CEO of Chelsea, said in a press release.
Lundbeck brought on Moelis & Company as its financial advisor for this transaction, with Cravath, Swaine & Moore LLP serving as its legal advisor. Chelsea enlisted Deutsche Bank Securities Inc. and Torreya Capital as its financial advisors, with Morgan, Lewis & Bockius LLP providing legal advice.
SOURCE: Lundbeck press release

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