UK-based Mallinckrodt has entered into a definitive agreement to sell its wholly-owned Canadian subsidiary BioVectra to a private equity affiliate of HIG Capital.
The sale price for BioVectra is approximately US$250 million, including fixed consideration of $175m, comprised of an upfront payment of $135m and a long-term note for $40m, and contingent payments of up to $75m, enabling Mallinckrodt to capture future BioVectra growth potential.
BioVectra is a CDMO whose global client base includes many top biopharmaceutical companies. The company has a mix of capabilities, with core growth engines in complex chemistry, biologics and drug development.
The Canadian company will continue to supply an active pharmaceutical ingredient supporting Mallinckrodt's specialty brands business under a long-term arrangement. The transaction is anticipated to include all of BioVectra's sites in Prince Edward Island and Nova Scotia, Canada, as well as its employee base.
"This transaction continues to advance Mallinckrodt's strategic focus on branded, high-growth biopharmaceuticals by monetising a non-core business," said Mark Trudeau, President and CEO of Mallinckrodt. "While we recognise the longer-term growth potential for BioVectra, we believe that the structure of this deal enables us to participate in the future success of the business, and therefore we see this sale as the best option for both Mallinckrodt and BioVectra moving forward."
Mike Gallagher, Managing Director at HIG Capital. "BioVectra demonstrates a tremendous ability to generate robust organic growth and utilises a broad set of technical capabilities to deliver outstanding service and quality. They are completing major capital expenditure programmes to significantly expand capacity and the company is well-positioned to capitalise on growing demand for their services."
The transaction is expected to close in Q4 2019, subject to customary closing conditions. It is not anticipated that the sale will have any material tax impact on Mallinckrodt. The company intends to use the proceeds from this divestiture consistent with its previously disclosed capital allocation priorities.