TPG acquires drug company for $583m

The firm has agreed to purchase listed pharmaceutical company Eurand for $12 per share, an add-on acquisiton for TPG’s portfolio company Axcan.

TPG Capital has entered into an agreement to acquire listed pharmaceutical company Eurand for approximately $583 million in cash, or $12 per share.

Eurand develops and manufactures pharmaceutical and biopharmaceutical products using proprietary drug formulation technologies. The deal is an add-on acquisition for TPG’s portfolio company Axcan, which focuses on the treatment of gastrointestinal disorders and was purchased by the firm in late 2007 for $1.3 billion. The transaction is expected to close in the second quarter of 2011.

Debt financing for the deal was provided by Bank of America Merrill Lynch, Barclays Capital and RBC Capital Markets. Jefferies & Company is acting as financial advisor to Eurand.

Eurand chairman and chief executive officer Gearóid Faherty will remain in his position at the company through the end of 2010, after which chief commercial officer of Eurand John Fraher will assume the title of CEO.

The deal for Eurand marks the second high profile acquistion for TPG in the past two weeks, following the firm’s $3 billion take private of J.Crew on 24 November. TPG first invested $500 million in J.Crew in 1997, before taking the company public in 2006, raising $376 million in the IPO. Also last month, TPG agreed to buy 74.67 percent of cosmetics company Avon Japan for a total cash payment of approximately $90 million.

TPG’s latest fund, TPG Partners VI, closed on $19 billion in 2008, but subsequently permitted limited partners to reduce their commitments by as much as 10 percent. As of 31 March, the fund was generating a net IRR of negative 26.8 percent and a return multiple of 0.8x, according to performance data from the California Public Employees’ Retirement System.