Japan’s Takeda Pharmaceutical Co. has entered into an agreement to sell its consumer healthcare subsidiary to Oscar A-Co KK, a company controlled by US investment fund Blackstone Group, in a deal valued at 242 billion yen ($2.3 billion).
Takeda Consumer Healthcare Co. (TCHC) is focused on the consumer health care market primarily in Japan. The portfolio to be divested to Blackstone (BX) includes a variety of over-the-counter (OTC) medicines and health products that generated total revenues of over 60 billion yen in fiscal year 2019.
Blackstone plans to develop the business together with current TCHC management and will continue to employ its staff. Takeda anticipates to post a pre-tax gain of approximately 140 billion yen on the sale of shares of the subsidiary, to be recognized when the transfer of shares is executed and completed. The transaction is expected to close by March 31, 2021, subject to customary legal and regulatory closing conditions.
“Today’s transaction will provide TCHC with the ownership, resources and strategic focus to continue to thrive and meet the needs of customers, while further sharpening Takeda’s strategic focus and commitment to financial discipline and transforming science into life-changing medicines,” said Takeda CEO Christophe Weber. “We are confident that under Blackstone, TCHC will be well-positioned to continue growing and developing its product offerings in the years to come to address the evolving needs of consumers.”
TCHC’s regional brands include Alinamin, its top selling product and Japan’s first vitamin B1 preparation, and Benza, a cold remedy.
Takeda (TAK), which started TCHC as a separate business in April 2017 to further develop the consumer health care business in Japan, says the company is now focused on highly innovative medicines across its five key business areas and working to address significant unmet patient needs in these fields.
Japan’s largest pharma company said the sale is part of its divestiture program. So far in 2020, Takeda has sold three different non-core asset portfolios in the Asia Pacific, Europe, and Latin America regions.
BX shares have recouped most of their losses but are still down 5.3% since the beginning of the year. Looking ahead, the average analyst price target of $61.88 indicates 17% upside potential is lying ahead over the coming year.
Meanwhile, Oppenheimer analyst Chris Kotowski last month maintained a Hold rating on the stock, saying that his current valuation framework suggests that the stock is fairly valued.
“We view the stock as an attractive core growth holding, but near-term it is trading at roughly a 15% premium to the S&P, roughly in line with its average last year,” Kotowski wrote in a note to investors.
Overall BX scores a cautiously optimistic Moderate Buy analyst consensus which breaks down into 5 Buys versus 4 Holds. (See Blackstone stock analysis on TipRanks).
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