Raptor Pharmaceutical Corp. (NASDAQ:RPTP) stock was up by more than 20% after Horizon Pharma PLC (NASDAQ:HZNP) said it would buy it for $800 million. The acquisition does not come as a surprise given the wave of consolidation in the sector as giant pharmaceuticals look for ways to bolster their portfolio of drugs for treating rare diseases.

Horizon-Raptor Merger

In addition to bolstering its portfolio of drugs, Horizon Pharma is planning to use the acquisition to strengthen its businesses in the United States. The acquisition should also provide the Ireland-based pharmaceutical the much-needed firepower for expanding in Europe and other international markets.

Raptor Pharmaceutical acquisition should go a long way in diversifying Horizon’s revenue stream with the addition of 11 new medicines, cutting across three business units of orphan, rheumatology, and primary care. The transaction should also bolster the Ireland-based pharmaceutical’s rare disease revenue, which in the first quarter accounted for 45% of the overall revenue.

Acquisition Terms

Under the terms of the agreement, Horizon Pharma is to pay $9 for every Raptor share representing a 21% premium. The company is to finance $675 million of the total bid with external debt with the remaining amount being paid with cash on hand. The deal should close in the fourth quarter. Chief executive officer, Julie Ann Smith, expects the transactions to deliver immediate value to shareholders given the all-cash premium.

“The proposed acquisition of Raptor furthers our commitment to helping people with rare diseases and is a significant step in advancing our strategy to expand our rare disease business,” said Timothy P. Walbert, chairman, president, and chief executive officer.

Last year, Raptor Pharmaceutical Corp. (NASDAQ:RPTP) generated $125 million in revenue. This year it expects its revenue to range between $125 million and $135 million this year. Its lead product Procysbi is currently approved in the US for the treatment of a rare metabolic disorder. It also has Quinsair, a drug approved in Europe and Canada for the treatment of chronic pulmonary infections.