Japan's Hisamitsu to buy US Noven for $428 million

Hisamitsu becomes the fourth Japanese pharmaceutical company to announce a US acquisition in the recent past, as it makes a tender offer for transdermal and women's health company Noven.

Japan's Hisamitsu Pharmaceutical Company said on Tuesday morning US time that it will buy Miami-headquartered Noven Pharmaceuticals for a cash consideration of $428 million. The acquisition will be made through a tender offer to existing shareholders.
The acquisition price translates to $16.50 per share, assuming Hisamitsu manages to buy all the outstanding shares of Noven. This represents a 22% premium to the closing price of Noven's common stock on July 13 and a 43% premium to the average closing price in the preceding 90 days.
The tender offer will be launched by a wholly-owned subsidiary of Hisamitsu. Post completion, the subsidiary will be merged into Noven, which will make the US company a wholly owned subsidiary of Hisamitsu. The tender is expected to start by July 28 and last for 20 business days.
Hisamitsu, which currently owns 4.9% of Noven, has made it a condition of the takeover that it corners a majority of Noven's shares. The Japanese company has worked with Noven on development projects and has been a shareholder of the US company since 2002.
Lazard is the financial adviser to Hisamitsu with Nishimura & Asahi and Debevoise & Plimpton providing legal advice. J.P. Morgan Securities is advising Noven with Cravath, Swaine & Moore acting as legal counsel.
Noven will continue as a standalone business unit, operating at its current locations in Miami and New York, and will retain its existing workforce.
"The proposed acquisition by Hisamitsu -- a company Noven has come to know, respect and trust over the course of several years -- provides substantial value to Noven shareholders, while positioning Noven as the US growth platform of a global company with significant resources and a vision aligned with our own," Peter Brandt, Noven's president and chief executive officer, said in a written statement. The deal between the two companies envisages Brandt stepping down after an agreed transition period. He will be replaced by Jeffrey Eisenberg who is currently Noven's executive vice-president and president of Novogyne, a joint venture between Novartis Pharmaceuticals and Noven.
Hisamitsu was established in 1847 under the name of Komatsuya. It has been listed on the Tokyo Stock Exchange since 1962. In the most recent financial year it registered $1.3 billion of sales. Hisamitsu has two Japanese headquarters in Kyushu and Tokyo and currently employs 1,890 people spread across 26 global offices.

Hisamitsu's breakthrough product Salonpas, a therapeutic pain-relief patch, was introduced in 1934 and started being exported outside Japan in 1937. Salonpas continues to be a market leader, and on the back of its success, Hisamitsu has developed a range of transdermal patches, which release medicine through the skin. It has also forayed into other over-the-counter and prescription pharmaceutical products.
Hirotaka Nakatomi, president of Hisamitsu, commented that Noven will be a catalyst for Hisamitsu to increase its US presence. Hiramitsu launched its Salonpas patch in the US as recently as 2008.
Noven Pharmaceuticals is a specialty pharmaceutical company operating in three principal areas: transdermal drug delivery; the Novogyne Pharmaceuticals joint venture, a women's health products company jointly owned by Noven and Novartis Pharmaceuticals; and Noven Therapeutics, a specialty pharmaceutical marketing and sales unit acquired by Noven in August 2007.
Noven's products are mostly for prescription and include an oestrogen patch and the only patch approved for the treatment of ADHD (attention-deficit hyperactivity disorder). Along with the statement of the takeover on Tuesday, Noven announced that second phase clinical trials for a non-hormonal therapy it is developing to treat hot flashes associated with menopause have been positive, giving a fillip to its drug launch pipeline.
Hisamitsu is the fourth Japanese pharmaceutical company to announce a takeover in the US in the last 18 months. This deal follows Eisai's $3.9 billion takeover of MGI Pharmaceuticals in December 2007, Takeda's $8.8 billion takeover of Millennium in April 2008 and Shionogi's $1.4 billion takeover of Sciele in September 2008. Japanese healthcare companies are being hard-hit at home by a government desperate to pare the cost of healthcare for its ageing population. Acquisitions abroad is one way for them to secure growth for the future, and to gain access to a pipeline of US drugs, regulatory approvals and established distribution networks. The latest deal may be smaller than some of those announced earlier but its strategic intent is identical.

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