Avanir Pharmaceuticals Inc. in Aliso Viejo said Tuesday that it has agreed to be acquired by Japanese drug giant Otsuka Pharmaceutical Co. for about $3.5 billion in cash, the latest in a string of mergers sweeping the healthcare sector.
Otsuka, a unit of Otsuka Holdings Co., will pay $17 a share, a 13% premium over Avanir's closing price Monday. Avanir shares jumped on the announcement and were at $16.93, up $1.93, or 12.8% in midsession Nasdaq trading.
The proposed merger would combine Otsuka's expertise in treating mental illness with Avanir's research and development of drugs dealing with neurological disorders. Otsuka makes the drug Abilify, used to treat depression, bipolar disorder and other conditions. Under the terms of the deal, Avanir will operate as an independent unit of Otsuka's American subsidiary.
The Avanir deal comes on the heels of the much larger acquisition of Botox maker Allergan Inc. in Irvine last month by Irish drug maker Actavis for about $66 billion.
The healthcare sector this year has rung up merger and acquisition deals totaling more than $440 billion, 13% of all such transactions so far on Wall Street. The total value of all M&A activity tops $3.2 trillion, the most since the financial crisis of 2008 and one of the biggest deal years on record.
The Actavis deal is among the largest in any sector. Other large healthcare deals include Actavis' $28-billion agreement in February to buy rival Forest Laboratories Inc. of New York and Minneapolis medical device maker Medtronic Inc.'s $47-billion deal for Ireland's Covidien in June.
While the general deal wave is being pushed mostly by low interest rates, analysts said health-related mergers also are driven, in part, by the Affordable Care Act as providers seek more clout for negotiations with cost-conscious insurers.
Among pharmaceutical companies, in particular, the key reason behind transactions is the expiration of patents on leading drugs and the need to hone product portfolios to build “franchises in key treatment categories,” according to a report by accounting firm KPMG.