Monday 26 February 2018

Jazz buyout sees Mulligan stake valued at €270m

Elan is being taken by a US pharmaceutical firm
Elan is being taken by a US pharmaceutical firm

Tara LaChapelle and Nick Webb

Former Elan executive Seamus Mulligan saw the value of his stake in Jazz Pharmaceuticals hit almost €270m as shares reached record heights following the $1bn (€730m) acquisition of rare drug developer Gentium.

Bloomberg filings show Mr Mulligan still owns 2.87 million shares in Jazz Pharmaceuticals or a near five per cent stake in the US listed firm, which was created when he merged his Azur Pharma with US firm Jazz in 2012.

The Jazz share price has soared over the past year due to continuing takeover speculation. With drugmakers on the prowl for targets in Ireland because of the country's lower corporate tax rate, investors have been speculating that Dublin-based Jazz may be among the next companies to draw bids.

Jazz's enviable tax base is only part of the appeal as the $7.3bn company bolsters its product line-up with the $1bn purchase of rare-disease drug developer Gentium.

Gentium -- which won European approval in October to treat a disease that can occur after stem cell transplants -- may quadruple its revenue over the next three years, according to analysts' estimates compiled by Bloomberg.

Sales for Jazz's own treatments, including Xyrem for narcolepsy, are projected to rise 62 per cent, and the company is already more profitable than most of its peers, Bloomberg data shows. The two businesses together are likely even more tempting for acquirers, according to analysts at both Cantor Fitzgerald and RF Lafferty brokerages.

"With the addition of Gentium, Jazz has further diversified the revenue base," said a New York-based analyst at RF Lafferty. "It's a positive addition, a positive step forward for Jazz. This makes them a more attractive target."

Jazz more than doubled in 2013 as the company won a federal judge's support in a patent dispute over its best-selling medicine Xyrem and as industry acquirers pursued Irish targets to help lower their tax bills.

Actavis of Parsippany, New Jersey, bought Dublin-based Warner Chilcott last year, allowing the company to shift its domicile to Ireland and reduce its tax rate to 17 per cent from about 37 per cent.

Also last year, Michigan-based Perrigo bought Dublin-based Elan. Perrigo said the purchase would help it save more than $150m a year because of lower taxes and cost cuts.

Other US drugmakers such as Allergan, Mylan and Forest Laboratories also considered buying Elan, people with knowledge of the matter told Bloomberg News in July.

It's been a "feeding frenzy", Timothy Chiang, an analyst at CRT Capital Group LLC, said in August, when investors began speculating that Jazz may be among the next Ireland-based pharmaceutical targets after the takeovers of Elan and Warner Chilcott.

© Bloomberg

Irish Independent

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