Lundbeck said the company and Ovation Pharmaceuticals, Inc. signed a definitive transaction agreement, whereby Lundbeck, through the wholly owned subsidiary Lundbeck, Inc., would buy Ovation in an all cash transaction valuing Ovation at up to US$900 million. The deal is expected to be accretive to Lundbeck's net profit post transaction costs and amortisation related to the acquisition in 2010.
As per the terms of the deal, Lundbeck would make an upfront payment of US$600 million immediately upon closing of the transaction. Additional payments of up to US$300 million within one year of closing are contingent upon the achievement of certain product regulatory milestones relating to the approvals of Sabril by the FDA.
The transaction would be financed through a combination of existing cash resources and new DKK 2.5 billion acquisition debt underwritten by Nordea and Danske Bank. Lundbeck estimates that the new debt would be fully repaid in little more than one year of closing of the transaction through the expected operating cash flows.