LONDON - AstraZeneca said Thursday that it would pay up to $4.1 billion to acquire Bristol-Myers Squibb’s stake in an alliance to jointly develop diabetes drugs.
Under the deal, AstraZeneca will initially pay $2.7 billion, plus up to another $1.4 billion in regulatory, start-up and sales-related payments. As part of the deal, AstraZeneca will make certain royalty payments to Bristol-Myers until 2025.
“Diabetes is rapidly becoming a global challenge of epidemic proportions that is expected to affect more than 550 million people by 2030,†said Pascal Soriot, AstraZeneca’s chief executive. “Much of this impact will be felt in emerging markets where AstraZeneca has a strong presence.â€
The transaction is subject to regulatory approval and is expected to be completed in January 2014.
The deal will give AstraZeneca a broader portfolio of drugs and provide Bristol-Myers additional capital for drug development in other areas.
“This agreement will allow us to further evolve our business model as a leading specialty biopharma company and increase resources behind the opportunities that drive the greatest long-term value for patients, our company and our shareholders,†said Lamberto Andreotti, the chief executive of Bristol-Myers.
Following the deal, AstraZeneca will own the rights to a number of drugs to treat diabetes, including Onglyza, Kombiglyze and Byetta.
Bristol-Myers and AstraZeneca entered into the alliance in January 2007 in order to jointly develop drugs to treat type-2 diabetes. The alliance later expanded to other diabetes-related products.
The agreement includes the sale of a manufacturing facility in West Chester, Ohio, and covers the future purchase of Bristol-Myers Squibb’s Mt. Vernon, Ind., manufacturing plant about 18 months after the closing of the transaction.
The deal is subject to local consultation and legislation. Substantially all employees of Bristol-Myers Squibb dedicated to the diabetes business will be transferred to AstraZeneca.
Bristol-Myers expects to receive about $3.4 billion in the first quarter of 2014 as part of the transaction. Bristol-Myers Squibb will to conduct some clinical trials that were started as part of the alliance.
AstraZeneca also said that it would incur a non-cash, pre-tax charge of about $1.7 billion related to Bydureon, a diabetes drug whose sales have been below expectations.
AstraZeneca said it did not expect the Bristol-Myers transaction to affect its core earnings per share in 2013.
Goldman Sachs was financial adviser to Bristol-Myers Squibb and Kirkland & Ellis was its legal adviser.
