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How the Numbers Add Up for the Horizon Pharma–Raptor Deal

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Acquisition transaction details

According to the September 12, 2016, definitive agreement between Horizon Pharma (HZNP) and Raptor Pharmaceuticals, HZNP will acquire Raptor common stock at $9 per share. That translates to a total consideration of $800 million. Horizon plans to finance the acquisition with $675 million of external debt. The deal should close by 4Q16 and will be accretive to Horizon’s adjusted EBITDA in 2017.

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About Raptor Pharmaceuticals

Raptor Pharmaceuticals is a biopharmaceutical company focused on therapies for rare and fatal diseases. The two commercialized drugs in its portfolio are Procysbi and Quinsair. According to Raptor’s guidance, the company should report sales of $125 million– $135 million in fiscal 2016.

About Horizon Pharma

Horizon Pharma operates through three business divisions: primary care, orphan, and rheumatology. Primary care accounted for 66.6% of the company’s 2015 revenues. With multiple acquisitions, Horizon intends to become an orphan drug–focused company by 2020. For fiscal 2016, HZNP is expected to cross $1 billion in net sales. For an overview of its aggressive acquisition history, please read How Horizon Became a Growth Stock.

The pharmaceutical and biotechnology industry has recently witnessed multiple acquisitions. Some of the major transactions in 2016 include Pfizer’s (PFE) acquisition of Anacor and Medivation (MDVN), Jazz Pharmaceuticals’ (JAZZ) acquisition of Celator, and Shire’s (SHPG) acquisition of Baxalta.

If you invest in the iShares Nasdaq Biotechnology ETF (IBB), you can gain exposure to inorganically growing Horizon Pharma. IBB offers a 0.54% weight in Horizon.

In the next part of the series, we’ll look at the benefits of the Horizon-Raptor transaction.

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