Japan’s Taisho offers to acquire Bristol-Myer’s UPSA for $1.6bn

Japan-based Taisho Pharmaceutical has offered to acquire US-based Bristol-Myers Squibb’s UPSA consumer health business for $1.6bn.

The offer from Taisho is structured in the form of a "put option" agreement.

Upon exercise of this put option, the Japanese firm will acquire UPSA and Bristol-Myers Squibb’s assets and liabilities associated with the consumer health business’product portfolio.

A French pharmaceutical company and brand, UPSA develops consumer medicines to cater to European markets besides some more countries.

Taisho is an over-the-counter (OTC) drug maker and is present in anti-inflammatory analgesic, cold and flu and hair growth segments in Japan and Southeast Asian markets.

Bristol-Myers Squibb chairman and chief executive officer Giovanni Caforio said: "The announcement marks the culmination of an in-depth strategic review to identify the best option to grow the UPSA business for the long-term.

"UPSA is a strong business that deserves the best possible opportunities for its employees and its future development. With Taisho we have found an experienced and reliable buyer with the strategic interest to successfully sustain and grow the business for the future."

The potential transaction is expected to be completed during the first half of 2019, following regulatory approvals and meeting of certain other customary closing conditions.

"With Taisho we have found an experienced and reliable buyer with the strategic interest to successfully sustain and grow the business for the future."

In 2009, Taisho forayed into the OTC market in some Asian countries with the acquisition of PT Squibb Indonesia from Bristol-Myers Squibb. This acquired unit has become Taisho’s subsidiary, which is currently known as PT Taisho Pharmaceuticals Indonesia.

Since 1935, UPSA has been into development of pharmaceutical drugs and supplements for everyday ailments. Currently, its portfolio of products covers a range of therapeutic areas such as pain, cough & cold, vitamins and supplements, gastrointestinal and sleeps.

For the last several years, Bristol-Myers Squibb has been realigning its business portfolio. It is focused on discovering, developing and delivering transformational medicines for patients facing serious diseases. UPSA, which manufactures consumer medicines, is outside of Bristol-Myers Squibb’s core focus area.

If the deal completes, Bristol-Myers Squibb estimates it would be around $0.04 dilutive to 2019 earnings.

This offer from Taisho comes at a time when pharma companies are trying to handle a shrinkage in the Japanese drug market as a result of government-led price reductions and generic drugs promotion.

The sales of the Taisho’s OTC drugs in overseas markets were around JPY8.8bn in April-September period, a drop of 7.9% on year.

Deutsche Bank Securities and Jefferies served as financial advisors to Bristol-Myers Squibb.

Kirkland & Ellis, Freshfields Bruckhaus Deringer LLP and Baker & McKenzie served as its legal advisors.

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