10 LEXPERT MAGAZINE
|
FEBRUARY 2016
LEXPERT: From the outside, this deal
looked like it was doomed by the news
events swirling around it. How did the deal
teams manage to save this one?
Rubin Rapuch (Fasken Martineau DuMoulin
LLP, for Concordia): is deal did not re-
quire saving. What was happening outside
was market noise, albeit loud market noise.
John Emanoilidis (Torys LLP, for Cinven):
e parties signed on just before the drug-
pricing controversy unfolded in the press,
but all parties remained committed to the
transaction. ey continued to see signifi-
cant value in the deal and were willing to
do the hard work to get to closing.
Rapuch: If a transaction makes economic
sense, the transaction in all likelihood will
be completed, regardless of extraneous mar-
ket conditions. e Concordia acquisition
of Amdipharm occurred during a period of
unsettled capital markets and health-care
sector conditions, but these events were ex-
traneous to the transaction. ey made for
some challenges, but the economic funda-
mentals of the transaction made sense for
the parties and therefore prevailed.
LEXPERT: Before we get into those chal-
lenges, let's start with the initial environ-
ment. What was the logic behind this deal?
John Sabetti (Fasken): Concordia has a
strategy of growth through acquisition. It
determined that the economic metrics and
other features of the Amdipharm acquisi-
tion – including product diversification
and geographic exposure – satisfied its cri-
teria and fit well within its growth strategy.
LEXPERT: How would you describe the ne-
gotiations? Friendly? Guarded? Tense? Did
that change as the news began to unfold?
Sabetti: e definitive acquisition docu-
ment was signed prior to the change in
market conditions, so they did not really
factor into the deal. at being said, given
the tight timeline set for the transaction, I
would characterize negotiations as intense
but efficient and co-operative.
Emanoilidis: e parties and their advi-
sors were all seasoned deal-makers and
had plenty of experience with the unex-
pected twists and turns that can arise on
any transaction. Despite the unexpected
developments, everyone involved remained
focused on getting the deal done.
LEXPERT: Okay, let's get to those develop-
ments. About two weeks aer this deal was
Extraneous Events
announced, e New York Times came out
with the story about Turing Pharmaceuti-
cal and how it had inflated prices. e very
next day Hillary Clinton started an ava-
lanche in the health-care sector when she
tweeted her outrage. What was going on in
your respective deal camps?
Rapuch: e timing of these extraneous
events was unfortunate, but the business,
financial and legal teams proceeded with a
focus on expediency and efficiency to miti-
gate these events to the extent possible.
Emanoilidis: We all kept a close eye on the
controversy as it unfolded, but everyone
continued to drive forward to execute on
the deal, despite the new challenges intro-
duced by what was going on in the media.
LEXPERT: en, aer Clinton voiced her
outrage, a short-seller's report suggested
that Valeant Pharmaceuticals could be
inflating its revenue — and that sent the
entire sector plummeting. From the date
of announcement to date of close, Con-
cordia's shares fell over 70 per cent. Did the
prospect of equity financing vanish?
Sabetti: e funding for the deal was fully
committed at the time of the acquisition's
announcement. What was uncertain was
the ultimate mix of equity, notes and credit
facilities, and this was ultimately deter-
mined in the context of the market.
Emanoilidis: e parties all believed that
there continued to be good value in the
deal and that the acquisition could still be
completed on its original terms. e par-
ties and their advisors worked very hard
to make sure that happened, even in the
face of what was happening to share prices
across the sector.
LEXPERT: I imagine this kind of deal cre-
ates a great deal of uncertainty. How did
you advise your respective clients in the
media maelstrom?
One news story led to the pharma-sector crash. Here's how Concordia-Amdipharm survived
BY DAVID DIAS
John
Emano-
ilidis
Torys LLP
(for Cinven)
Rubin
Rapuch
Fasken
Martineau
DuMoulin LLP
(for Concordia
Healthcare
Corp.)
John
Sabetti
Fasken
Martineau
DuMoulin LLP
(for Concordia
Healthcare
Corp.)
Its shares riding high, Concordia Healthcare was ready to snag UK-based phar-
ma-corp Amdipharm Mercury last September. Then, two weeks after announce-
ment, the deal faced headwinds as The New York Times alleged pricing abuses
in the sector. Hillary Clinton tweeted outrage. A probe was launched, subpoenas
issued. Short-sellers piled on with accusations of fraud. A dizzying eight weeks
later, Concordia's shares had fallen 70 per cent — and yet the deal closed.
According to the lawyers involved, it all amounted to market noise (albeit loud).
ON THE DEAL
