Jazz Will Buy Rare-Disease Drugmaker Gentium for $1 Billion

Dec 20, 2013 9:51 am ET

(Updates with opening share price in fifth paragraph.)

Dec. 20 (Bloomberg) -- Jazz Pharmaceuticals Plc, the maker of the narcolepsy treatment Xyrem, agreed to buy Gentium SpA, a rare-disease drug developer, in a deal valued at $1 billion.

Jazz, based in Dublin, will pay $57 a share in cash, a 2.4 percent premium over yesterday’s closing price in New York for Gentium’s American depositary receipts, the companies said in a statement. Villa Guardia, Italy-based Gentium received approval in October from European regulators for Defitelio, a treatment for a disease that can occur after stem cell transplants.

Jazz has been seen as a takeover target for a foreign drugmaker that could use the transaction to lower its tax rate. The company moved its headquarters from Palo Alto, California, in January 2012 after closing its acquisition of closely held Azur Pharma Ltd., which had been based in Dublin. The deal for Gentium is expected to add immediately to Jazz’s earnings per share, the companies said.

“Incorporating Gentium into Jazz Pharmaceuticals is a strong strategic fit as Defitelio would diversify our development and commercial portfolio and complement our clinical experience,” Bruce Cozadd, Jazz’s chief executive officer, said yesterday in a statement announcing the deal.

Jazz gained 6.4 percent to $122 at 9:49 a.m. New York time. The company’s shares have more than doubled this year. Gentium rose 2.5 percent to $57.05.

The acquisition was approved by both boards, and is expected to close in the first quarter of next year, the companies said.

Jazz last year purchased EUSA Pharma Inc. for $650 million, giving it the leukemia drug Erwinaze. It’s biggest product, Xyrem, is expected to generate sales of $567 million this year, according to the average of eight analysts’ estimates compiled by Bloomberg.

Jefferies LLC acted as financial adviser to Gentium, and Barclays Plc advised Jazz.

--Editors: Andrew Pollack, Romaine Bostick