KKR

New York-based private equity firm KKR has agreed to buy a significant minority stake in specialty drugmaker Arbor Pharmaceuticals, in a bid to help drive continued growth.

Financial terms of the transaction were not disclosed by both companies.

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Sources familiar with the development were cited by Reuters saying that the deal values the drug-maker at more than $1bn, including debt. In addition, sources said KKR will own more than a quarter of Arbor.

KKR health care investing team director Ali Satvat said: "We believe that Arbor, with its diversified product portfolio, late-stage development pipeline and proven business development acumen, is well positioned for continued growth."

Arbor president Ed Schutter said: "Arbor remains committed to creating value for patients by identifying, developing and bringing to market improved medicines with a focus on quality."

"Arbor completed more than 20 acquisition, licensing or product development transactions over the past four years, filing for multiple products with US Food and Drug Administration."

Subject to regulatory approvals and other customary closing conditions, the transaction is expected to close early in the first quarter of 2015.

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The agreement between both companies followed after reports emerged in October of a possible stake sale in Arbor including strategic options. It was also reported that Arbor was working with investment bank JPMorgan Chase & Co.

Lazard Middle Market serves as financial advisor and King & Spalding as legal counsel to Arbor in relation to the deal. Simpson Thacher & Bartlett acted as legal counsel to KKR.

Arbor markets branded prescription products for cardiovascular, hospital, and paediatric markets, as well as generic products through its Wilshire division.

The company completed more than 20 acquisition, licensing or product development transactions over the past four years, filing for multiple products with US Food and Drug Administration, as well as several branded and generic products in late-stage development.

Image: KKR’s headquarters in the Solow Building in New York City, US. Photo: courtesy of Ilya Voytov.