Biocon Biologics Ltd (BBL), a Biocon subsidiary, announced the acquisition of Viatris’ biosimilars business for $3.3 billion in cash and stock. The acquisition has been approved by the boards of directors of both firms.
Viatris will get $2 billion in cash at the transaction’s settlement, as well as up to $335 million in subsequent payments expected in 2024. Furthermore, following completion of the transaction, BBL will issue $1 billion in compulsorily convertible preference shares (CCPS) to Viatris, representing fully diluted equity ownership of at least 12.9 percent in the company.
Kiran Mazumdar-Shaw, Executive Chairperson of Biocon Biologics (BBL) said in a statement, “This acquisition is transformational and will create a unique fully integrated, world-leading biosimilars enterprise. This strategic combination brings together the complementary capabilities and strengths of both partners and prepares us for the next decade of value creation for all our stakeholders.”
The acquisition is scheduled to close in the second half of 2022, assuming all closing conditions are fulfilled (including certain regulatory approvals). The firms will also sign a Transition Services Agreement, under which Viatris will provide certain transition services, along with commercialization services, for a two-year term. Viatris will also invest BBL $50 million to cover certain capital expenditures.
BBL will also acquire Viatris’ international commercial infrastructure across developed and emerging regions, as well as its global biosimilars business, which is projected to generate $875 million in revenue and EBITDA of $200 million in the fiscal year 2022 and to surpass $1 billion in revenue the following year. BBL will also receive Viatris’ rights to all biosimilar assets, including its in-licensed portfolio, as well as the potential to acquire Viatris’ rights to bAflibercept.
BBL stated in a statement that as a result of the transaction, it will have one of the industry’s biggest and strongest commercialized biosimilars portfolios. Biocon will have a diverse portfolio that includes commercialized insulins, oncology & immunology biosimilars, among other biosimilars in development. Through its proposed deal with Serum Institute, the company also gets access to the vaccines portfolio. BBL will also release the full revenue as well as associated profits from the partnered products after the transaction is closed. Its EBITDA base will be increased, allowing it to invest for long-term growth.
The $2 billion cash payment will be covered by $800 million in equity investment in BBL, with the remaining funded by additional equity, debt, or a combination of the two. BBL has got expressions of interest from financial institutions for debt funding as well as equity commitments from its existing shareholders.