Health Business


Combination Creates Diversified Pharmaceutical Company with 5th Largest Generics Business in the United States

Combined Company to Benefit from Expanded Generics Product Portfolio, Premier Diversified Generics Pipeline, Broad R&D Capabilities Across Dosage Forms, High-Quality and Low-Cost Global Manufacturing and Distribution Network, and Enhanced Financial Foundation

Combined Company to Have Industry-Leading Growth Profile with  Annual Double-Digit Organic Growth in Revenue and Adjusted EPS

Transaction Expected to Generate $200 Million of Annual Cost Savings within  Three Years and be Accretive to Impax’sAdjusted EPS within First 12 Months

Strong Combined Cash Flow Allows for Pay-Down of Debt and Future Growth Investments Impax Affirms 2017 Financial Guidance


Amneal Pharmaceuticals LLC and Impax Laboratories, Inc. (NASDAQ: IPXL) today announced that they have entered into a definitive business combination in an all-stock transaction. As a result of the transaction, Amneal Holdings members will own 75% and Impax shareholders will own 25% of the new company’s pro forma shares.

The combined company, to be named Amneal Pharmaceuticals, Inc., will have a robust generics business that will rank as the 5th largest in the United States by gross revenue and a growing, high-margin specialty franchise.  The combined company is expected to have 2018 pro formaadjusted EBITDA of approximately $700 million to $750 million, which includes significant cost savings within the first full year of close. In addition to its broad existing commercial product portfolio, the combined organization will have a diverse and differentiated pipeline with more than 300 products either filed with the FDA or in active stages of development, a foundation for international expansion with select commercial presence in the United Kingdom and Germany, and cost-efficient global manufacturing and development capabilities in all dosage forms. The transaction is expected to enhance the combined organization’s competitive position and allow for continued success in anevolving generics market.

“In the 15 years since our family founded Amneal, we have established the company as a leader in the U.S. generic pharmaceuticals industry, and today marks an important milestone in these efforts,” said Chirag Patel, Co-Chief Executive Officer and Co-Chairman of Amneal.  “This transaction combines the complementary strengths of both Amneal and Impax to create an even stronger company with the diversification, capabilities and resources to deliver enhanced value for patients, new opportunities for our collective employees and increased growth and value creation for shareholders.”

“We are excited to join with Impax to create one of the most dynamic companies in the pharmaceutical industry,” said Chintu Patel, Co-Chief Executive Officer and Co-Chairman of Amneal.  “This combination will help us achieve our long-term goals of providing greater access to safe and affordable medicine for people around the world, while also positioning us for continued success.”

“This combination delivers on several key stated growth objectives for Impax,” said Paul Bisaro, President and Chief Executive Officer of Impax. “By combining Amneal and Impax, we create a more diversified company with one of the industry’s leading high-value generic product pipelines and a growing specialty business.  Our combined portfolio will be supported by global, high-quality development and manufacturing capabilities.”

“This transaction is financially compelling as we expect the combination to be accretive to Impax’s standalone adjusted per share earnings in the first 12 months and generate double-digit growth in revenue and adjusted EPS over the three years following the close of the transaction.  We expect to achieve annual cost synergies of approximately $200 million within three years,” Bisaro continued.  “The anticipated strong cash flows from the combined company allow for the repayment of debt and the ability to meaningfully invest in our business.”

The new company will be led byan experienced team with a proven track record in driving strong organic growth and successfully integrating acquisitions.  Amneal’s Founders and Co-Chief Executive Officers, Chirag Patel and Chintu Patel, will serve as Co-Chairmen of the combined company’s Board of Directors. Paul Bisaro, President and Chief Executive Officer of Impax, will serve as Chief Executive Officer of the combined company, and Bryan Reasons,Senior Vice President, Finance and Chief Financial Officer of Impax, will serve as Chief Financial Officer.  This leadership team will be supported by the combined company’s nearly 6,500 employees operating from strategically positioned locations around the globe.

Numerous Strategic Benefits to Drive Future Growth

  • Significantly Expanded Generics Portfolio: The combined company will have a generics portfolio with approximately 165 differentiated product families marketed in all dosage forms. The combined company will hold a #1 or #2 position in a significant number of its marketed products.
  • Exceptional Generics Pipeline: The combination is expected to create one of the largest generic pipelines in the United States, with approximately 150 pending ANDAs and 165 projects in active stages of development. Nearly half of all pipeline products are exclusive first-to-file, first-to-market or other high-value opportunities with three or fewer competitors estimated at the time of launch. The combination also adds a foundation for commercial entry into biosimilars with two in-licensed products: one filed and one near-term filing opportunity in development.
  • High-quality R&D Capabilities: The combined company will have a strong commitment to R&D. Its annual R&D investment is expected to be approximately 10% of pro forma combined net revenue, with a focus on the strategic development of high-value products within generics and specialty pharmaceuticals.The combined organization’s internal generic R&D capability is expected to drive growth through continued investment in the development of complex dosage forms and technologies, including injectables, topicals, transdermals, inhalation, complex molecules and drug-device combinations. Additionally, the combined company is expected to benefit from well-established external partnerships focused on maximizing pipeline opportunities in specialty delivery forms and biosimilars.
  • Strengthened Global Supply Chain Capability: The combined company is expected to manufacture and distribute its products from a strengthened global supply chain supporting capabilities across all dosage forms, with R&D and manufacturing sites in the United States, India and Ireland.
  • GrowingSpecialty Franchise: The combined company will include Impax’s high-margin specialty franchise, which is expected to provide stable cash flow and long-term growth through its innovative platform of products targeting CNS disorders, anti-parasitic infections and other select specialty therapeutic areas. The specialty portfolio includes RYTARY® (carbidopa and levodopa), ZOMIG® Nasal Spray (zolmitriptan), EMVERM™ (mebendazole) and ALBENZA® (albendazole).

Financially Compelling Transaction

  • Industry Leading Growth Profile: On a pro forma basis, the combined company is expected to generateannual double-digit growth in net revenue, adjusted EBITDA and adjusted EPS over the three years following the close of the transaction. The combination is expected to be accretive to Impax’s adjusted EPS in the first 12 months after close.
  • Diversified Revenue Stream:The combination creates sustainable long-term growth potential in generics and provides significant revenue diversification, with the top fivegeneric drugs of the combined company accounting for approximately 25% of pro forma net revenue for the last 12 months ended June 30, 2017.
  • Significant Cost Saving Opportunities:The transaction is expected to generate $200 million in annual cost savings within three years following the close of the transaction. The majority of the savings will result from the complementary nature of the companies’ combined operations as well as margin-enhancing product transfer opportunities. These savings are incremental to the previously announced Impax standalone cost savings initiatives.
  • Significant Cash Flow Generation:The combined company is expected to have 2017 pro forma net revenue ranging from $1.75 billion to $1.85 billion and pro forma adjusted EBITDA of approximately $600 million to $650 million in 2017 and $700 million to $750 million in 2018, each including $80 million to $120 million of annualized cost savings within the first full year of close. The significant cash flow generated will enable the new company to pay down debt, while also continuing to invest in R&D and high-growth specialty assets.

Transaction Terms

Under the terms of the agreement, a new, publicly traded holding company, Amneal Pharmaceuticals, Inc., will be formed. As a result of the transaction, Amneal Holdings members immediately prior to the closing of the transaction will receive non-economic, voting shares of Amneal Pharmaceuticals, Inc. and will be able to exchange, at or following closing, their membership units in Amneal Pharmaceuticals LLC for class A common shares of Amneal Pharmaceuticals, Inc. As a result, Amneal members immediately prior to the closing of the transaction will own approximately 75% of the voting power of Amneal Pharmaceuticals, Inc. and Impax’s shareholders immediately prior to the closing of the transaction will own approximately 25% of the voting powerof Amneal Pharmaceuticals, Inc. The transaction will be structured as an “Up-C” transaction with a tax receivable agreement split 85% / 15% between AmnealHoldings members and Amneal Pharmaceuticals, Inc., respectively.

In connection with the transaction, the combined company has secured fully committed financing from JPMorgan Chase Bank, N.A. and Bank of America Merrill Lynch to refinance both companies’ current outstanding debt obligations.

Private Placement

In connection with the transaction, Amneal Holdings members have entered into definitive purchase agreements with select institutional investors including TPG and funds affiliated with FidelityManagement & Research Company to sell 46.8 million unregistered common shares for gross proceeds of $855 million, or approximately 15% of fully diluted common shares outstanding on an as converted basis,at $18.25 per share expected to occur shortly after closing of the combination, in a private placement.

“We’ve known Paul for many years, and his credibility and vision as a great operator and leader, paired with the extraordinary business built by the Patel brothers, creates a truly powerful business combination,” said John Schilling, Partner at TPG.  “At a time where scale and differentiated products continue to increase in importance, this transaction brings together a great operator and a market-leading pipeline to form a unique company that serves an array of unmet patient needs. We are excited to support the team as they create this world class company.”

New Company Board of Directors and Headquarters

The new combined company’s Board of Directors is expected to be comprised of 11 members, six of whom will be appointed by Amneal Holdings, including Chirag Patel and Chintu Patel, and five of whom will be appointed by Impax, including Impax Chairman, Bob L. Burr, who is expected to be appointed lead independent director, and Paul Bisaro.  Other members of the Board will be announced in the coming months.

The new combined company Amneal Pharmaceuticals will be headquartered in Bridgewater, New Jersey.

Approvals and Timing

The transaction agreement has been unanimously approved by the Boards of Directors of Amneal and Impax, and is supported by the management teams of both companies.

The transaction is expected to close in the first half of 2018, subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals andImpax shareholder approval.  Amneal Pharmaceuticals received the requisite approval from its members for the transaction.

Impax 2017 Financial Guidance Affirmed

Impax today confirmed the Company’s full year 2017 financial guidance, as previously discussed on August 9, 2017 in connection with the Company’s second quarter 2017 financial results and reviewed below.  The Company’s full year 2017 estimates are based on management’s current expectations, including with respect to prescription trends, pricing levels, inventory levels, and the anticipated timing of future product launches and events.  The estimates exclude the cost savings and one-time charges from the new cost savings initiatives outlined in the consolidation and improvement plan announced on May 10, 2017.

The Company does not provide forward-looking guidance metrics as outlined below on a GAAP basis as certain financial information, such as restructuring and impairment charges and other items used to determine such measures are not available and cannot be reasonably estimated. The following statements are forward looking and actual results could differ materially depending on market conditions and the factors set forth under “Safe Harbor” below.

  • Adjusted gross margins as a percent of total revenue are expected to be approximately 47% to 49%.
  • Adjusted research and development expenses, including patent litigation expenses, across the generic and brand divisions of approximately $93 million to $97 million.
  • Adjusted selling, general and administrative expenses of approximately $190 million to $195 million.
  • Adjusted interest expense of approximately $28 million.
  • Capital expenditures of approximately $25 million to $30 million.
  • Effective tax rate of approximately 33%.
  • Full year 2017 adjusted net income per share of $0.55 to $0.70.


J.P. Morgan Securities LLCis serving as financial advisor to Amneal in connection with the combination and as placement agent to Amneal in connection with the private placement. Latham & Watkins LLP is serving as legal counsel to Amneal.  Morgan Stanley is serving as financial advisor to Impax, and Sullivan & Cromwell LLP is serving as legal counsel.  In addition, Impax received advice from BofA Merrill Lynch.

Don't be shellfish...Share on Facebook0Share on Google+0Share on LinkedIn0Share on StumbleUpon0Pin on Pinterest0Tweet about this on Twitter0
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

To Top