In a statement, Waren Acquisition – a vehicle controlled by DLJ Merchant Banking and JP Morgan Partners – said it had reached agreement with Northern Irish pharmaceuticals business Warner Chilcott regarding a £1.615 billion (€2.3 billion; $3 billion) acquisition.
The two private equity firms are paying 862 pence in cash for each Warner Chilcott share, representing a 33 percent premium to a closing price of 648 pence per share on 17 September 2004 – the last business day prior to an announcement from Warner Chilcott that it had received an approach from a consortium of private equity institutions.
DLJ and JP Morgan appear to have finally beaten off competition from two other private equity consortia. Earlier this week Blackstone Group, GS Capital Partners, Kohlberg Kravis Roberts and Texas Pacific Group submitted an 837 pence per share offer. There was also reported to have been interest from a consortium led by Bain Capital, which included Carlyle Group and Thomas H Lee Partners.
It is understood that higher offers may yet be submitted for the target company, but if a rival bid were accepted, Warner Chilcott would have to pay the DLJ/JP Morgan consortium a break fee equivalent to one percent of the deal’s value.
Warner Chilcott is a speciality pharmaceuticals company based in Craigavon, Northern Ireland, and Rockaway, New Jersey. Its ordinary shares were listed on the London and Irish Stock Exchanges in 1997 and its American Depositary Shares (ADS) on Nasdaq in 2000.
Since the acquisition of Warner Chilcott Laboratories Inc in September 2000, the firm has been increasingly focusing its business on the women’s healthcare and dermatology markets in the US. Earlier this year, it completed the disposal of the majority of its remaining UK operations.
“Waren is committed to further developing the business and building on its success in the US pharmaceutical market, which will provide new and interesting challenges for our employees,” said Dr John King, executive chairman of Warner Chilcott.
In the 12 months ended 30 September 2004, Warner Chilcott posted revenues of $522.9 million and operating profits of $189.9 million. At the same date, the firm’s net assets were valued at $1.226 billion and its net debt at $5.5 million.
DLJ Merchant Banking is part of Credit Suisse First Boston’s alternative capital division, which has $20 billion of private equity assets under management across a diverse family of funds. DLJ Merchant Banking is currently investing its DLJ Merchant Banking Partners III fund, which has capital commitments of $5.3 billion.
JP Morgan Partners, which is the private equity arm of JP Morgan Chase & Co, has approximately $13 billion under management and has closed over 1,300 deals since its inception in 1984.