Why Apollo’s Covis Is Buying AMAG Pharmaceuticals In A $647 Million Deal

By Noah Long ● October 2, 2020
  • Covis announced this week that it is buying AMAG Pharmaceuticals (NASDAQ: AMAG) for $13.75 per share in cash, or approximately $498 million ($647 million on an enterprise basis)

Covis announced this week that it is buying AMAG Pharmaceuticals (NASDAQ: AMAG) for $13.75 per share in cash, or approximately $498 million on a fully diluted basis and about $647 million on an enterprise basis, including debt obligations. AMAG is known for offering treatments for iron deficiency anemia.

Covis is a company that is backed by Apollo Global Management (NYSE: APO). The purchase of $13.75 per share is 46% higher than AMAG’s closing price on September 30. And the deal was unanimously approved by AMAG’s board.

It’s worth mentioning that AMAG has been working closely with activist investor Caligan Partners to improve on their performance and cut costs. After making an agreement with Caligan, AMAG reduced its expenses by over $100 million and made several strategic decisions such as ending a licensing agreement for Vyleesi.

Upon the successful completion of the tender offer, an indirect wholly-owned subsidiary of Covis will merge with AMAG and the outstanding AMAG shares not tendered in the tender offer will be converted into the right to receive the same $13.75 per share in cash paid in the tender offer. Covis plans to finance the transaction with cash on hand, and a combination of committed debt, and equity financing.

All of the board members and executive officers of AMAG have agreed to tender their shares in favor of the transaction. Goldman Sachs & Co. LLC is acting as the exclusive financial advisor and Goodwin Procter LLP is acting as legal advisor to AMAG. And Paul, Weiss, Rifkind, Wharton and Garrison LLP is acting as legal advisor to Covis.

KEY QUOTES:

“AMAG’s category-leading treatments are strong strategic complements to our existing therapeutic portfolio. Through this combination, we believe we will be able to unlock value for all of our stakeholders, employees and patients through the effective and efficient management of these products, coupled with our two companies’ longstanding commitment to expanding patient access to therapy and putting patient interests first. At Covis, we never lose sight that our patients are our paramount concern. We look forward to engaging with the talented team at AMAG as we work together to plan the integration of our two organizations.”
— Covis CEO Michael Porter

“In the beginning of 2020, AMAG announced that the company had undertaken a strategic review of our product portfolio and strategy, the guiding principles of which included driving near- and long-term profitability and enhancing shareholder value. This strategic review resulted in the company pursuing and accomplishing the divestiture of its women’s health assets, and other efforts to streamline and strengthen the core business to position AMAG for the future. Following this initial transformation, our Board of Directors and management team, together with independent legal and financial advisors, thoroughly evaluated the transaction with Covis as well as other strategic options and concluded that it represents the most compelling opportunity for shareholders, providing them certain and immediate cash value. We believe Covis is the right partner for AMAG, especially in light of Covis’ shared commitment to ensuring that our therapies will reach patients in need. We are confident the work we’ve done will continue to thrive under Covis’ leadership.”
— AMAG CEO Scott Myers