Glaxo to acquire Stiefel Lab for $2.9b

[sajiv]

Glaxo to acquire Stiefel Lab for $2.9b

GlaxoSmithKline, the British drug company, will acquire Stiefel Laboratories, a closely held American maker of dermatology products, for $2.9 billion in cash, the companies said on Monday.

Under the terms of the agreement, GlaxoSmithKline will also assume $400 million of debt, and may pay out as much as $300 million more if certain performance targets are met. It will combine its existing prescription dermatological products with Stiefel's and the new specialist global business will operate under the Stiefel identity within the GSK Group. The companies said the global business would have combined revenue of about $1.5 billion and would have a "robust new product pipeline."

"The addition of Stiefel's broad portfolio will provide immediate new revenue flows to GSK with significant opportunities to enhance growth through leveraging our existing global commercial infrastructure and manufacturing capability," said GlaxoSmithKline Chief Executive Andrew Witty in a statement.

The deal marks the latest round of consolidation among drug makers, who have sought to acquire product lines in the face of pressure from rivals making generic products. So far this year, Pfizer has agreed to buy Wyeth for $68 billion; Merck has agreed to acquire Schering-Plough for $41 billion; and Roche has struck a $46.8 billion deal for the 44 per cent of Genentech it did not already own. Analysts have predicted that other major drug makers would have to pursue such deals to refresh their pipelines. The Stiefel deal will also allow the Blackstone Group, the leveraged buyout firm, to cash out. It bought a $500 million minority stake in privately held Stiefel in August 2007.