Mayne Pharma acquires Metrics for upfront $105 million

Australia’s Mayne Pharma (ASX: MYX) has entered into a binding agreement to acquire Metrics, a privately-owned, US-based provider of contract development services to the pharma industry that also develops and manufactures niche generic pharmaceuticals.

Consideration for the acquisition will comprise an upfront $105 million plus further payments of up to $15 million based on fiscal year 2013 performance (12 months ended June 30, 2013). The first payment, capped at $10 million, is calculated as 6.0x the incremental earnings before interest, tax, depreciation and amortisation (EBITDA) for FY13 and the second payment is calculated as 2.0x the EBITDA in excess of $19.8 million for FY13, capped at $5 million.

The upfront acquisition payment represents a multiple of 6.5x3 the EBITDA generated by Metrics in the 12 months ended June 30, 2012. The full acquisition price of $120.0 million will be payable if Metrics achieves FY13 EBITDA of $22.3 million, representing an acquisition multiple of 5.4x FY13 EBITDA.