Warner Chilcott Plc, a maker of contraceptives, said privately held Leo Pharma would re-acquire the U.S. rights to its topical psoriasis treatments for about $1 billion in cash, sending its shares up 4 percent.
I think (the deal) is a net positive. I think (Warner Chilcott) got a good price for it, Jefferies analyst David Windley said.
The company, which expects the sale of Dovonex and Taclonex products to be accretive, on a percentage basis, said the deal will result in a one-time gain of about $450 million, or about $1.79 a share.
Net cash proceeds of about $980 million will be used to repay and terminate its existing senior secured credit facilities and partly finance the pending purchase of Procter & Gamble's pharma unit, it said.
We believe that the sale of the Leo assets puts us in the best position to focus on the soon to be acquired P&G pharmaceuticals assets... It puts us in an excellent position to conclude our financing for the (P&G unit) acquisition under favorable terms, Warner Chilcott said on a conference call with analysts.
Last month, Ireland-based Warner Chilcott bought Procter & Gamble Co's pharmaceuticals business to expand its presence in women's health care business.
(Psoriasis treatment) is an area that was to be reduced, in emphasis, in the combined company after the P&G pharma deal... So there's some justification in the focus that (the sale to Leo) creates on the women's health side of the business, Windley said.
Leo Pharma is re-acquiring exclusive product licensing rights of Taclonex, Taclonex Scalp, Dovonex and all products in Leo's development pipeline, including the inventories of the products.
Leerink Swann analyst Gary Nachman, who considered the resale to Leo was a smart deal, said that the company's balance sheet looks a lot better.
The proceeds will reduce the amount of financing needed to complete the pending acquisition of P&G pharmaceuticals unit, which according to the deal terms requires Warner Chilcott to pay a termination fee if the deal isn't closed by Dec. 31.
The specialty pharmaceutical company suspended its 2009 outlook in lieu of the sale of its psoriasis treatment assets, and deal with P&G, it said in the call.
Shares of the company were trading up 13 cents at $19.90 Wednesday morning on Nasdaq. They had earlier touched a high of $20.56.
(Reporting by Anuradha Ramanathan in Bangalore; Editing by Aradhana Aravindan and Maju Samuel)