American giant buying South African-owned company for R14 billion

Life Healthcare is selling Life Molecular Imaging (LMI) to a British subsidiary of American pharmaceutical giant Lantheus.
Life Healthcare, through its UK-based subsidiary, said that it had entered into a binding agreement with Lantheus Radiopharmaceuticals UK Limited, which is owned by Massachusetts-based Lantheus Holdings Inc., for the sale of 100% of the Group’s interests in LMI.
LMI is a fully integrated research and development radiopharmaceutical company that focuses on developing and commercialising molecular imaging agents for use in PET-CT diagnostics.
It has operations in the EU, UK and USA and has relationships with manufacturers, hospitals, imaging centres and neurologists in several key markets.
The purchase consideration comprises an Upfront Payment of an enterprise value of USD350 million, R6,475 million.
An additional USD400 million, R7,400 million, could also be paid and are linked to milestones of future sales of LMI products up to 2034.
This means that the combined purchases could bank Life Healthcare just under R14 billion.
“Life Healthcare is expected to retain the commercial benefits awarded to LMI under the RM2 sub-license agreement reached with Lantheus in June 2024, subject to agreeing upon the terms on which the net economic benefit of that sub-licence agreement will be delivered to Life Healthcarebeforeo completion of the Proposed Transaction,” said the group.
The net proceeds from the upfront payment are anticipated to be USD200 million (roughly R3,700 million), and, subject to board approval, are intended to be returned to shareholders within 12 months of the completion date.
The group said that the transaction provides an opportunity for shareholders to unlock the material value in LMI in the immediate term, derisk the execution of the LMI business plan by partnering with a credible partner, and the right to elect to manufacture and distribute LMI products in Africa.
It added that the proposed transaction is still subject to the fulfilment or waiver (to the extent permissible) of conditions precedent typical for a transaction of this nature.
Life Healthcare acquired LMI in 2018 as part of its investment in the Alliance Medical Group (AMG) to bolster its utilisation of cyclotrons in Europe with further upside for the manufacturing, distribution and sales of radiopharmaceuticals in other parts of the world.
However, Life Healthcare sold AMG to iCon Infrastructure in Q1 2024 and returned R8.8 billion to its shareholders by way of a special dividend.
“Since the disposal of AMG, the Board has considered if Life Healthcare is the appropriate owner of LMI, taking into account the nature of the business, its funding needs and the skills required to optimise and grow the asset,” said the group.
“As part of this review, the Group has identified products in LMI’s portfolio that would be better suited to be fully developed and commercialised by other parties.”
“To this end, LMI concluded a sub-licence agreement with Lantheus for one of its early-stage diagnostic and therapeutic products targeting the gastrin-releasing peptide receptor (RM2) whereby LMI sub-licenced RM2 for an upfront consideration of USD 36 million and potential further milestone and royalty payments”
“During its due diligence for the RM2 transactions and in the subsequent collaboration activities with the LMI team, Lantheus identified the complementary nature of its business and LMI resulting in a subsequently executed unsolicited letter of intent (“LOI”) to acquire all of LMI.”
Life Healthcare notes that the LMI business plan carries material execution risk, with a significant portion of the positive cash flows, forecast to be realised from 2028 onwards. The deal thus gives shareholders the opportunity to realise the longer-term value upfront.
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