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Jazz Closes EUSA Acquisition

JAZZ

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Jazz Pharmaceuticals plc (JAZZ - Analyst Report) recently announced the completion of the EUSA Pharma acquisition, which was initially announced in April 2012. EUSA Pharma, a privately-held specialty pharmaceutical company, has operations in the US and EU along with a global distribution network.

The acquisition was clinched at a total consideration of $680 million in cash, including $30 million of adjustments for EUSA Pharma’s working capital, cash and certain liabilities. Jazz Pharma may end up paying an additional $50 million if Erwinaze net sales exceed a specified target in the US in 2013.

With this acquisition, Jazz Pharma has gained a portfolio of oncology and critical care products outside the US including Erwinaze. Jazz Pharma will harvest EUSA Pharma’s international sales and marketing capabilities.

As per the agreement, EUSA Pharma will retain its current name outside the US. EUSA Pharma will market a portfolio of products outside the country along with managing the pan-European presence and distribution network in many other additional territories. The company’s portfolio consists of six specialist hospital products including Erwinaze sold across 79 countries.

Jazz Pharma had arranged for funds for the acquisition from its current cash balance and a six-year $475 million term loan with an initial interest rate based on a LIBOR rate, subject to a floor of 1.0 %, plus 4.25 % per annum.

Jazz Pharmaceuticals mentioned that it will be updating its financial guidance. On the first quarter earnings call, the company had projected total revenues in the range of $500–$510 million and adjusted earnings in the range of $4.25–$4.40 for 2012. The company expects the EUSA Pharma acquisition to be accretive in 2012. It is expected to boost 2012 revenues by $90–$100 million and adjusted earnings by 25 – 30 cents.

Currently, we have an Outperform recommendation on Jazz Pharmaceuticals, which carries a Zacks #1 Rank (short-term Buy rating).

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