Blackstone Said to Weigh Buyout of Concordia Healthcare

  • Other bidders may also be interested in Toronto-based company
  • Concordia confirms it is exploring 'strategic alternatives'

Blackstone Group LP is considering a takeover of listed Canadian pharmaceutical company Concordia Healthcare Corp., according to people familiar with the matter.

The buyout firm is in talks with Concordia about a potential transaction, the people said, asking not to be identified as the discussions are private. Talks are at an early stage and a deal may not happen, they said. Other bidders may also be interested in acquiring Concordia, they said.

Toronto-based Concordia said in a statement after the market closed that it has formed a special committee of the board to consider strategic alternatives.

“The company has had discussions, however, there can be no assurance that any transaction will occur,” it said in the statement.

Shares in Concordia rose as much as 28 percent before trading was halted at 1.52 p.m. in Toronto pending news. They closed at C$30.86, valuing the company at about C$2 billion ($1.6 billion).

Shares of specialty pharmaceuticals companies also rose. Horizon Pharma Plc climbed as much as 10 percent, Endo International Plc gained as much as 13 percent and Mallinckrodt Plc increased as much as 6.4 percent.

A spokeswoman for Blackstone declined to comment.

Acquisition Spree

Concordia last year agreed to buy Amdipharm Mercury Ltd. in a deal valued at about $3.5 billion, part of an acquisition spree that’s seen it spend almost $5 billion on transactions since 2013. Its growth-by-acquisition strategy has drawn comparisons with that of its larger peer Valeant Pharmaceuticals International Inc.

In a related transaction, it agreed to sell a 14 percent stake to buyout firm Cinven in October.

Chief Executive Officer Mark Thompson said at the time the Amdipharm deal would give the drugmaker the global scale it needs to go after larger targets. Thompson worked for Biovail Corp. before its 2010 merger with Valeant.

Short Sellers

Concordia shares have fallen more than 73 percent since the Amdipharm acquisition -- its largest to date -- after investors grew concerned about its debt levels and the company became a target for short sellers.

The company also got caught up the wake of the crisis at Valeant and the increased scrutiny on the health-care sector. Several U.S. officials have criticized the industry, including U.S. presidential candidate Hillary Clinton, who has promised stricter regulations on what she called “predatory pricing” on prescription drugs.

“Concordia has been the subject of an unrelenting and unscrupulous attack by a group of short sellers for several months,” CEO Thompson said in a statement last month. “We will continue to monitor this situation and will act accordingly. However, we are extremely excited about the business we have built and the opportunity to deliver long-term shareholder value.”

Before it's here, it's on the Bloomberg Terminal.