ZS Pharma Inc (NASDAQ:ZSPH) has agreed to be acquired by AstraZeneca PLC (ADR) (NYSE:AZN) in a cash transaction valued at $2.7 billion. The deal comes just when ZS Pharma is making submissions to allow it market a potential blockbuster drug in the U.S. and the Europe. AstraZeneca expects ZS Pharma acquisition to be accretive to its sales starting next year and boost earnings starting 2018.
The board of ZS Pharma Inc (NASDAQ:ZSPH) has endorsed the buyout offer from AstraZeneca. If all regulatory hurdles are cleared in time, the two companies predict their marriage could be complete by the end of this year.
AstraZeneca has eyes on ZS-9
By acquiring ZS Pharma Inc (NASDAQ:ZSPH), AstraZeneca is clearly not looking for already flowing revenues, but the potential in the business. ZS Pharma has an experimental medicine currently called ZS-9. The treatment is designed for a rare but life-threatening blood condition known as hyperkalaemia. The drug has already successfully gone through the three clinical trial levels. It is widely believed to have blockbuster potential with AstraZenecapredicting its annual sales at more than $1 billion.
AstraZeneca is jumping on the opportunity in ZS Pharma’sZS-9 at a time when its own blockbusters are coming to the end of their patent protection life. According to AstraZeneca’s CEO, Pascal Soriot, acquisition of ZS Pharma will boost their efforts in metabolic and cardiovascular treatments.
Request for marketing approval
ZS Pharma has already submitted request for marketing approvalofZS-9 to the U.S. Food and Drug Administration (FDA) and is planning to do the same in Europe later this year.
Impact on financial performance
AstraZeneca expects ZS Pharma Inc (NASDAQ:ZSPH)to start contributing to sales as early as next year and become accretive to earnings from 2018. However, the acquisition is initially expected to be dilutive to AstraZeneca’s earnings in 2016 and 2017.
42% premium payout
With the $2.7 billion price tag, shareholders of ZS Pharma Inc (NASDAQ:ZSPH)are expected to receive $90 per share, which is a 42% premium over the closing price of ZS Pharma stock the day before the deal was announced.