Blackstone in $3.6bn pharma exit

Twenty months after investing $500m in dermatology company Stiefel, the 162-year-old US company has been sold to GlaxoSmithKline.

The Blackstone Group has secured an “attractive exit” from the $3.6 billion sale of portfolio company Stiefel Laboratories to pharmaceutical giant GlaxoSmithKline (GSK).

The private equity firm declined to comment on specific financial details.

In August 2007, Blackstone made a $500 million growth investment in Stiefel, a Florida-based pharmaceutical company founded in 1847 that specialises in dermatology. The minority investment allowed Blackstone to appoint one person to Stiefel’s board, but the Stiefel family retained control and majority ownership of the company.

GSK is paying $2.9 billion in cash for the company, assuming roughly $400 million in debt and will make further cash payments of up to $300 million contingent on performance.

Stiefel, combined with the global pharmaceutical client’s existing dermatology products, last year had sales of $1.5 billion, representing an 8 percent market share, GSK said. Stiefel’s 2008 sales were approximately $900 million, up from $445 million in fiscal 2007, while GSK’s prescription dermatology products had revenues of about $550 million.

“This transaction will create a new world-leading, specialist dermatology business and re-energise our existing dermatology products,” Andrew Witty, GSK chief executive, said in a statement.

GSK noted that Stiefel products will benefit from GSK’s global distribution and commercial channels, particularly in emerging markets like Brazil, Russia, India and China. In turn, GSK’s products will benefit from “Stiefel’s specialty sales force, relationships and experienced management in dermatology”.

The deal is expected to close in the third quarter, but is subject to regulatory approval. GSK noted there must not be a material adverse change in Stiefel’s business prior to closing, or the deal is null.