Charlottetown-based drug manufacturer BioVectra is being sold to U.S. private equity firm H.I.G. Capital for as much as US$250 million (C$330 million) – more than three times the price it sold for almost six years ago.
BioVectra’s owner, British pharmaceutical company Mallinckrodt plc, issued a statement on Tuesday saying it had agreed to the sale. The price includes both a fixed payment now and a deferred payment that will depend on the company’s performance.
In a separate statement issued by the PEI BioAlliance, BioVectra management said it would continue to develop its plants in Charlottetown and Windsor, N.S., which together will add 150 employees. The company now employs 350 people and since 2015 has averaged almost $25 million in capital investments each year. The parties expect the deal to close by the end of the year.
"We are very excited to enter into this new chapter with H.I.G. Capital," said BioVectra President Oliver Technow. "Under H.I.G Capital's stewardship we have a fantastic opportunity to continue building and growing our business right here in Atlantic Canada.”
Founded in 1970 by J. Regis Duffy, then Dean of Science at the University of Prince Edward Island, BioVectra manufactures specialty chemicals and active pharmaceutical ingredients for drug-makers around the world.
The company in January 2013 agreed to be sold for $100 million to Questcor Pharmaceuticals of Anaheim, Calif., and Questor was subsequently purchased by Mallinckrodt in 2014.
Now the enlarged pharma company is selling BioVectra on to H.I.G Capital, a Miami-based private equity fund with more than US$34 billion under management.
Mallinckrodt will receive a fixed consideration of US$175 million, comprising an upfront payment of US$135 million and a long-term note for US$40 million. The seller is then due to receive contingent payments of up to $75 million, enabling Mallinckrodt to capture future BioVectra growth potential.
“We are excited to support BioVectra’s exceptional leadership and highly dedicated employees,” said H.I.G. Managing Director Mike Gallagher. “BioVectra demonstrates a tremendous ability to generate robust organic growth and utilizes a broad set of technical capabilities to deliver outstanding service and quality. They are completing major capital expenditure programs to significantly expand capacity and the company is well positioned to capitalize on growing demand for their services.”
In March, BioVectra announced a five-year, $145-million expansion to its facilities and plans to add 150 new employees. It is being financed in part by a $37.5-million contribution from the federal government's Strategic Innovation Fund. In 2018, BIOTECanada named BioVectra Canada’s Biotech Company of the Year.
“BioVectra has been on an impressive growth trajectory, and this acquisition by H.I.G. Capital will provide confidence to BioVectra’s employees and clients that will be fundamental to its future success,” said PEI BioAlliance CEO Rory Francis.
The Mallinckrodt-H.I.G. deal can’t be classified as an exit as the buyer and seller are both based outside the region. But it is the latest example of major recent transactions taking place in the P.E.I. life sciences space.
In June, Charlottetown-based MicroSintesis, which has developed a revolutionary product to ensure gut health in animals, sold a minority stake $16.4 million to John Risley’s private equity fund, Northern Private Capital. Two months before that, the P.E.I. research group Center for Aquaculture Technologies was bought for an undisclosed sum by Cuna del Mar, the aquaculture-focused investment group backed by Walmart heir Christy Walton. Early in 2018, Charlottetown-based marine biotech company Nautilus Biosciences was purchased by the U.K. specialty chemical-maker Croda Intl., also for an undisclosed price.
Correction: An early version of this story incorrectly said BioVectra's revenues averaged almost $25 million in the past three years. The correct wording is that the company made $25 million in investments.