Boston, MA 03/20/2014 (wallstreetpr) – Horizon Pharma Inc (NASDAQ:HZNP) has known losses in its reports since it went public in 2011. But the latest move to strike a deal with an Ireland drug company called Vidara could change the story for Horizon.
The company said that it would buy Vidara Therapeutics International in a cash and stock deal and went on to state that the deal will significantly boost its pipeline and lead to low tax rates for its operations. Horizon becomes the latest U.S. company out to benefit from the low corporate tax rates environment in Ireland. The other companies that have moved to enjoy the tax environment in Ireland include Perrigo Co Plc which acquired Elan, an Irish firm, for $8.6 billion last December.
In a show of support for the Horizon-Vidara deal, investors sent shares of Horizon Pharma Inc (NASDAQ:HZNP) soaring 25 percent to touch a life-high of $18.30 per share. The gain came on the back of solid volume that by far exceeded the daily average share volume.
Reduced tax rate
Lower tax rates are very attractive for a struggling company like Horizon. The CEO Timothy Walbert said that the combined company resulting from the union of Horizon and Vidara will have tax rate that is lower than 20 percent or thereabout. That will be significantly lower than 30 percent that the company expected. In this environmental, Horizon may turn profitable this year, thus putting an end to its losses.
Once the deal is done
Horizon Pharma Inc (NASDAQ:HZNP) hopes to boost its product pipeline by adding Vidara’s drugs to its own portfolio of arthritis therapies. Vidara has a genetic disorder drug called Actimmune which although has significant revenue potential, remains largely under-promoted. Thus, strengthening the marketing activity for Actimmune will definitely lead to higher revenue from the title. The drug generated $58.9 million in revenue last year, but it has a market potential of $150 to $200 million.
New company
The union of Vidara and Horizon Pharma Inc (NASDAQ:HZNP) will end in creation of a new company to be known as Horizon Pharma Plc. The company will be owned 26 percent by Vidara shareholders. The shareholders will also receive $200 million cash payment as part of the marriage deal.
