Jazz Pharmaceuticals’ $7.2bn Acquisition of GW Pharmaceuticals

By Edvard Bruu and Hannah Ohlsson (Stockholm School of Economics), Isabelle Duerbeck and Tim Bamberger (King’s College London)

 

Overview of the deal


Acquirer: Jazz Pharmaceuticals

Target: GW Pharmaceuticals

Implied Equity Value: X

Total Transaction Size: $7.2 billion

Closed date: Feb 3 2020

Target advisor: Goldman Sachs & Co. LLC and Centerview Partners LLC


Having agreed on a $7.2 billion acquisition of GW pharmaceuticals, Jazz attempts to diversify its product portfolio into cannabinoid-based medication. With this move, Jazz Pharmaceuticals is tapping into an expanding field of medical research gaining ownership of the first and only cannabis product that is FDA-approved, as well as the intellectual rights to several cannabis-based drugs in development. Both companies have a strong presence in the UK and are expected to be able to achieve substantial synergy effects in regards to both R&D as well as commercial distribution. Though the deal has many potential upsides, the high-debt level of the combined entity and the uncertainty relating to the legalization of cannabinoid pharmaceutical products, are clear, but manageable, risks with the transaction.


"We are joining two teams that share a passion for, and track record of, developing differentiated therapies that advance science and transform the lives of patients. This will help facilitate a successful integration and bring added capabilities to Jazz.” - Bruce Cozadd, Chairman and CEO of Jazz Pharmaceuticals

Company Details: (Acquirer - Jazz Pharmaceuticals)


Jazz Pharmaceuticals Public Limited Company is a specialty biopharmaceutical company focused on research on, and the development and commercialization of innovative products to address unmet medical needs. The Company has a diverse portfolio of products in the areas of narcolepsy, oncology, pain and psychiatry, to treat people with serious diseases—often with limited or no options.


Founded in 2003, headquartered in Dublin, Ireland

CEO: Bruce C. Cozadd

Number of employees: 1,700 +

Market Cap: $9,731B (as of 17/02/2021)

EV: $9.66B

LTM Revenue: $2.28

LTM EBITDA: $1B

LTM EV/Revenue: x4.24

LTM EV/EBITDA: x9.65


Company Details: (Target - GW Pharmaceuticals)


GW Pharmaceuticals became known for the first natural cannabis plant derivative to supplement multiple sclerosis treatment that gained market approval. The company has since focused on research and development of the therapeutic potential of cannabinoids, which the company claims “can bring valuable treatments to seriously ill patients”.