ROCHESTER ? JHP Pharmaceuticals will purchase the sterile manufacturing facility of King Pharmaceuticals in Rochester, some of King?s current products manufactured there and related contract manufacturing business for $90 million, subject to final inventory adjustments.
The companies also entered into a manufacturing and supply agreement pursuant to which JHP will provide certain fill and finish support with respect to King?s hemostatic product, Thrombin-JMI.
The agreement is subject to customary regulatory approvals, including antitrust review under the Hart-Scott-Rodino Antitrust Improvements Act. The companies expect to close during the third quarter. The agreement does not include King?s new Bicillin (sterile penicillin products) manufacturing and facility that is also in Rochester. JHP expects to offer employment to all current employees at the sterile manufacturing plant.
?This transaction represents the continued successful execution of our strategy for long-term growth, particularly with respect to the realization of greater operating efficiency for our Company,? said Eric Bruce, King Chief Technical Operations Officer. ?Importantly, this transaction will enable us to redeploy our current investments in these assets to our ongoing R&D and Business Development initiatives. We fully expect JHP will make a solid partner in support of our Thrombin-JMI business.?
Peter Jenkins, co-founder of JHP, said the acquired products will provide immediate critical mass in our target hospitals and clinic market. Stuart Hinchen, the other co-founder of JHP, said the transaction defines the immediate future for the Rochester facility.
King?s 2006 net sales for its legacy products included in the agreement totaled approximately $51 million. Net revenue from contract manufacturing at the facility totaled approximately $14 million during 2006.
King?s current total net book value of the assets which are the subject of this transaction, including inventory, is approximately $151 million. Accordingly, King expects to incur a special charge in the amount of approximately $60 million on closing the transaction. King incurred a net operating loss of approximately $1 million with respect to these assets in 2006.
King, based in Bristol, Tennessee, is a vertically integrated branded pharmaceutical company. JHP, headquartered in New Jersey, is a recently formed company founded by Peter Jenkins and Stuart Hinchen, previously senior executives with the specialty injectables company, Mayne Pharma Limited, which was recently acquired by Hospira. JHP is a private company whose shareholders upon closing of this transaction will include Morgan Stanley Principal Investments in addition to Jenkins and Hinchen.
