Hikma cuts cash consideration for Roxane by £370m

Hikma Pharmaceutical's takeover of Roxane Laboratories took on a new shape on Wednesday, with the cash consideration being almost halved off the back of significantly lower revenue projections.

The FTSE 100 company had published a prospectus on 22 January in relation to the acquisition, but said it had now received new information on the financial performance of Roxane in 2015.

Latest revenue projection was revised down to circa $650m (£449.1m).

As a result, Hikma and BI agreed certain changes to the terms of the acquisition, the company confirmed. It would now pay gross cash consideration of $647m, instead of the previously-announced $1.18bn.

Hikma would still issue an unchanged 40m consideration shares.

"Following further due diligence into the new information provided by BI, Hikma now expects that Roxane's unaudited revenue for 2015 was lower than had previously been anticipated, due to higher than expected rebates", the company's board confirmed in a statement.

"The rebates were paid primarily to wholesaleers and increased largely due to the shift from direct sales to retailers to indirect sales through the wholesalers", it added.

Hikma's board also considered that, based on the new information, Roxane's full year revenue for 2016 would also be negatively impacted, to finish lower than in 2015. Revenue in 2017 would also be negatively impacted to close between $700m and $750m, rather than the previously anticipated $725m to $775m.

"Whilst there will be a short term impact related primarily to higher-than-expected product rebates, we have agreed a reduced purchase price to reflect this, and we remain confident in our outlook for the business", said Hikma chief executive Said Darwazah.

"Roxane's impressive, differentiated product portfolio and pipeline along with its manufacturing capacity and technological capabilities will create a strong platform for sustainable long-term growth and substantial value for shareholders", he added.