Ebb & Flow

Biovitrum AB (SSE:BVT) is doing some fancy financial footwork to pull together the SEK3.5 billion ($496.7 million) it needs to pay for the acquisition of Swedish Orphan International AB, a combination the companies expect will result in a P&L with SEK5 billion in sales ($709.5 million) by 2015.

Biovitrum expanded an existing financing from Svenska Handelsbanken by adding a seven-year credit facility of up to SEK800 million ($113.5 million). It has put in place a fully committed and underwritten rights issue of about SEK1.5 billion ($212.9 million). And it will issue convertible participation certificates worth SEK1.7 billion ($241.2 million) to Swedish Orphan shareholders, which may be exchanged for convertible debt.

In all, 48% of the purchase price, or SEK1.7 billion, will be comprised of shares or convertible debentures, with the remaining SEK1.8 billion ($255.4 million) paid in cash.

Swedish Orphan shareholders are also eligible for a cash payment of up to SEK425 million ($60.3 million) based on sales of Multiferon interferon (IFN) alpha, which is marketed for malignant melanoma.

Going into the deal, Biovitrum's major shareholders are Investor AB (23%); MPM Capital (19%); Amgen Inc. (NASDAQ:

AMGN) (7%); Orkla (5%); and Alta Partners (5%). Swedish Orphan's major shareholders are Investor Growth Capital (42%) and Priveq (42%).

IGC will be paid in Biovitrum shares or convertible debt, while Priveq will receive cash. Swedish Orphan CEO Bo Jesper Hansen holds 14% of the company's shares and will receive payment in 40% shares and 60% cash. Investor AB and MPM Capital are expected to propose Hansen as executive vice chairman of the combined company.

The newco, which will be dubbed Swedish Orphan Biovitrum, will be held by Investor AB (41%);

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