Galenica to buy biotech firm Relypsa for $1.5 bln before break-up

Galenica has agreed to buy US biotech firm Relypsa for $1.53 billion in cash to strengthen its Vifor Pharma unit ahead of splitting up the Swiss healthcare group.

Galenica, which owns Switzerland's largest pharmacy network and the Vifor speciality pharmaceuticals business, said that Relypsa's board had recommended acceptance of its $32 per share offer.

The price represents a 59 per cent premium to Wednesday's closing for the California-based company, which makes Veltassa, the first new medicine in 50 years for treating hyperkalemia, or excessive levels of potassium in the blood.

Veltassa could soon face competition from AstraZeneca's ZS-9, which is currently awaiting US approval following a delay.

The acquisition will be financed with Galenica's own funds and a bridge loan, expected to be partially refinanced through equity proceeds from the group's division planned for 2017.

Following the closing of the transaction, which is expected during the third quarter of 2016, Relypsa will be delisted and integrated into Vifor Pharma.

In December Galenica announced plans to separate two business units, Vifor Pharma and Galenica Sante, into independent listed companies. The company initially expected to complete the division in the fourth quarter of 2016 but had to delay its plans to 2017 due the appointment of Vifor Pharma's new CEO.

Galenica has also raised the like-for-like forecast for the full year for Vifor Pharma due to "excellent momentum", and now expects the unit to achieve an increase of about 10 per cent in 2016 earnings before interest and taxes (EBIT).

It said the anticipated investment related to the acquisition of Relypsa might lead to a decrease of 80 million Swiss francs in the company's combined EBIT in 2016 but expects the newly purchased business to generate positive EBIT from 2019 onwards.