Perrigo Signs Agreement To Divest Tysabri Royalty Stream For Up To $2.85 Billion
Perrigo Company plc, a leading global provider of Quality Affordable Healthcare Products announced it has signed a definitive agreement to divest its rights to the royalty stream from the global net sales of the multiple sclerosis drug Tysabri (natalizumab) to RPI Finance Trust, an affiliate of Royalty Pharma (“RPI”). This transaction is valued at a total consideration of up to $2.85 billion, composed of $2.2 billion in cash at closing and up to $650 million in potential milestone payments based upon future global net sales of Tysabri® in 2018 and 2020. This transaction is expected to close within 30 business days, subject to certain specified closing deliverables.
Perrigo’s CEO John T. Hendrickson stated, “Today’s announcement is the result of Perrigo’s review of strategic alternatives for the Tysabri royalty stream announced in November 2016. We are pleased to have reached an agreement that maximizes the value of this non-core asset. While dilutive to adjusted EPS, the significant upfront cash component will allow us to de-lever our balance sheet, which supports our investment grade financial policy, and better positions Perrigo to pursue our strategic plan. This transaction also furthers our stated strategy to enhance our portfolio and focus on our consumer-facing and Rx businesses. This is a meaningful step in our portfolio review process and I am confident that the Board and management will continue to focus on creating value for shareholders.”
Royalty Pharma’s CEO, Pablo Legorreta, stated, “We are pleased to complete this important transaction with Perrigo and help Perrigo meet its strategic objective. Our diversified portfolio results in a low cost of capital, enabling us to provide the highest value to holders of royalties.Tysabri is a product we have followed for many years, serving an important need in patients suffering from multiple sclerosis. We are excited to have a royalty interest in this critical therapy.”
Under the terms of the agreement, Royalty Pharma will acquire all of Perrigo’s rights to receive Tysabri® royalty payments from and after January 1, 2017, which Perrigo has under an agreement with Biogen, Inc. Royalty Pharma will pay a cash purchase price of $2.2 billion at closing, plus additional payments of $250 million if the royalties earned on global net sales of Tysabri meet specified thresholds during 2018 and $400 million if the royalties earned on global net sales of Tysabri meet specified thresholds in 2020. Perrigo will also assign to Royalty Pharma certain information and audit rights under Perrigo’s existing agreement with Biogen. The agreement provides that the transaction will close within 20 business days, subject to a 10 business day extension at Royalty Pharma’s option upon Royalty Pharma’s making a $1 billion purchase price deposit.
Tysabri is an FDA approved treatment for multiple sclerosis. Perrigo acquired the rights to the Tysabri royalty stream through the Company’s 2013 acquisition of Elan Corporation plc.
Morgan Stanley and Co. LLC acted as sole structuring agent and lead financial advisor for this transaction. Evercore also acted as financial advisor to the Company and Wachtell, Lipton, Rosen and Katz is acting as a legal advisor to Perrigo. J.P. Morgan Securities LLC and BofA Merrill Lynch acted as financial advisors, and Goodwin Procter LLP and Matheson acted as legal advisors to Royalty Pharma in connection with this transaction.