Piramal Healthcare and Minrad International Inc., a provider of generic inhalation anaesthetic, jointly announced that they have signed a definitive merger agreement for Piramal to acquire Minrad.
Under the terms of the agreement, Minrad will merge with a newly incorporated wholly-owned subsidiary of Piramal. If the merger is completed, stockholders of Minrad will receive $0.12 per share in cash.
In connection with the merger agreement, Piramal has also agreed to acquire Minrad’s 8% Senior Secured Convertible Notes from the note holders.
Total consideration for the merger and acquisition of the notes, in cash plus the assumption of debt, will be approximately $40 million.
The transaction is conditioned upon approval by Minrad’s stockholders and other customary closing conditions. It is not subject to any financing contingency and is expected to close in the first quarter of 2009. The company expects it to be marginally EPS accretive from FY2010 onwards.
We believe this acquisition would help the company to scale up its inhaled anaesthetic product portfolio and build a global presence in critical care segment. We maintain a BUY on the stock with a target price of Rs340.