Concordia Healthcare Corp. T.CXR.R

TD - The Strategic Review

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• The Strategic Review – Management declined to update its April 21 disclosure regarding strategic review. We nonetheless continue to think that a transaction is conceivable in the 9x-10x EV/ EBITDA (trailing) range; resulting in a takeout price range of $40 - $55 (a greater than 74% premium to last night's close). Exhibit 4 illustrates a broader range of takeout scenarios. 
   

  Exhibit 3. Select Precedent Transactions

  
  
  Date/ Acquirer /Target /Target Profile/ Price (US$mm)/ Trailing Sales (US$mm)/ Trailling (US$mm)/ Valuation EV/EBITDA

  Feb-16 Mylan Meda Diversified $9,900 $2,339 $767 12.9x

  Sep-15 Concordia AMCo Diversified $3,300 $545 $283 11.6x

  Apr-15 Concordia Covis Diversified/ Legacy $1,200 $220 $198 6.1x

  May-13 Actavis Warner Chilcott Women's Health, GI, Derm $8,500 $2,541 $1,437 5.9x

  Jul-12 TPG Capital Par Pharmaceuticals Generics $2,270 $1,035 $273 8.3x

  J u n - 1 0 B i o va i l V a l e a n t D i ve r s i f i e d $ 3 , 2 0 0 $ 8 7 5 $ 3 9 7 8 . 1 x 

  Oct-10 Pfizer King Neuroscience, Acute Care $3,600 $1,780 $390 9.2x

  Nov-07 TPG Capital Axcan Pharmaceutical Gastroenterology $1,300 $369 $139 9.4x

  Average 8.9x

  Source: Company reports and TD Securities estimates 

 

Exhibit 4. Takeout Scenarios – Sensitivity Analysis

(US$) EV/EBITDA 7x 8x 9x 9.5x 10x 11x 12x
Q1/16 Annualized EBITDA $563mm	$16 $27 -32% 16%	$38 $43 63% 86%	$48 $59 $70 110% 157% 205%
Premium on yesterday close ($23.03)
2016E EBITDA Estimate $628mm	$24 $37 6% 59%	$49 $55 112% 138%	$61 $73 $85 164% 217% 270%
Premium on yesterday close ($23.03)

Source: Company reports and TD Securities estimates