NEW YORK (TheStreet) -- Horizon Pharma (HZNP) was up Wednesday afternoon on the news that it had acquired Vidara Therapuetics in a reverse merger valued at $660 million in cash and stock. The new company will be called Horizon Pharma plc.
The new company will be organized under Irish law presumably to take advantage of that country's more business friendly tax code.
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As for the details of the merger, "Pursuant to the agreement, Vidara will combine with Horizon Pharma, Inc. with approximately 74 percent of Horizon Pharma plc's ordinary shares to be exchanged for Horizon Pharma, Inc.'s common shares, with Horizon surviving the merger. The shareholders of Vidara will retain approximately 26 percent of Horizon Pharma plc and receive $200 million in cash, subject to certain adjustments."
Horizon Pharma expects the benefits of the merger to be fourfold:
- Accelerated transformation of Horizon to a profitable specialty pharma company;
- Expected pro forma combined, full year 2014 revenues of $250 to $265 million and EBITDA of $65 to $75 million;
- Expanded revenue base to include Horizon Pharma's Duexis, Vimovo and Rayos products marketed in the U.S., Vidara's Actimmune product marketed in the U.S. and Horizon's Lodorta marketed outside the U.S.;
- Tax efficient corporate structure enhanced to support Horizon's organic growth and acquisition strategy.
TheStreet Ratings team rates HORIZON PHARMA INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HORIZON PHARMA INC (HZNP) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."