Abbott Laboratories (NYSE:ABT) announced that it has entered a definitive agreement to acquire CFR Pharmaceuticals for approximately $2.9 billion to further expand its presence in Latin America.
Terms of the deal
Under the terms of the agreement, Abbott Laboratories (NYSE:ABT) will acquire a holding company that indirectly owns 73% stake in CFR Pharmaceuticals. It will also make a public cash tender offer for all the outstanding shares of the Latin American pharmaceutical company.
According to Abbott Laboratories (NYSE:ABT), it will also assume the net debt of CFR Pharmaceuticals worth around $430 million. The company plans to fund the acquisition with cash on its balance sheet and is expected to close the transaction by the end of the third quarter this year.
It will also acquire the manufacturing plants and R&D facilities of CFR Pharmaceuticals in Columbia, Chile and Argentina.
Abbott Laboratories (NYSE:ABT) said acquiring CFR Pharmaceuticals has no impact on its existing EPS guidance for the fiscal 2014. The company expected the acquisition to be accretive to its ongoing EPS next year and will increase in the years ahead, before one-time transaction related items.
Acquisition doubles Abbott’s branded generics presence
The acquisition will allow Abbott Laboratories (NYSE:ABT) to double its branded generics pharmaceutical presence in Latin American markets and become one of the top ten pharmaceutical companies in the region.
Abbott Laboratories (NYSE:ABT) estimated it would see approximately $900 million in additional sales annually during the first year of the acquisition. The company emphasized that CFR Pharmaceuticals generated double-digit operational sales growth over the past several years.
According to IMS, the Latin American pharmaceuticals market is estimated to reach $73 billion in sales this year. It is expected to reach $124 billion in sales by 2018. Its annual growth rate is expected at two or three times of the developed markets over the coming years.
In a statement, Miles D. White, chairman and CEO of Abbott Laboratories (NYSE:ABT) said, “With its scale and leadership position in the region, strong commercial and development organization, well-respected leadership team, and a trusted portfolio of recognized brands, CFR is one of the leading branded generics companies in Latin America. This acquisition will significantly enhance and broaden Abbott’s Latin American footprint, and is well aligned with our long-term strategy and commitment to fast growing markets.”
CFR Pharmaceuticals has a significant development pipeline. Last year alone, it launched more than 200 products across Latin America. The firm has a proven ability to quickly develop, manufacture and bring new products to the market, according to Abbott Laboratories (NYSE:ABT).