Zeneca and Salick Health Care Announce Definitive Agreement for Strategic Partnership

Strategic Insights -

Zeneca, an international bioscience company, and Salick Health Care, a leading US provider of disease-specific health care services to patients with cancer and other complex, chronic illnesses, have entered into a definitive agreement for a strategic partnership. Under the terms of the agreement, Zeneca will purchase a 50% interest in Salick, with the shareholders of Salick receiving cash and new common stock subject to put and call rights. This partnership aims to enable Zeneca to make a strategic expansion of its services to managed care organizations, oncologists, and their patients.

Key Takeaways:

  • The partnership involves Zeneca purchasing a 50% interest in Salick Health Care, a leading US provider of disease-specific health care services to patients with cancer and other complex, chronic illnesses.
  • Salick shareholders will receive $37.75 in cash, one share of new special common stock, and a payment of $1.25 from Salick, payable in two equal installments at 6 and 12 months after closing.
  • The new special common stock carries a right to put (sell) the stock to Salick and an obligation on Zeneca to fund the purchase at 2.5 years after closing at a price of $42 per share.
  • Salick provides health care and managed care services in several areas, including comprehensive cancer centers, inpatient and outpatient kidney dialysis, infusion, nutritional, and other services.
  • The partnership aims to deepen Zeneca's knowledge of cancer and cancer care, improve the quality and cost-effectiveness of cancer care, and provide valuable insights into the unmet needs of the total cancer market.
  • Dr. Bernard Salick, Chairman, Chief Executive Officer, and President of Salick, will remain in place after the transaction, and Salick's Board structure will include equal representation from Zeneca and Salick.
  • The partnership will allow Salick to expand its innovative health care service networks and disease management services, providing significant benefits to multiple health care systems, payors, and patients.

Statistics:

  • Salick Health Care had net assets of $102 million and made pre-tax profits of $16.9 million on sales of $131.5 million for the year ended 31 August 1994.
  • The cancer market in the US accounts for approximately $40 billion in medical costs annually, with about 6% of these expenditures being for pharmaceutical products.
  • Cancer-related health care costs are expected to grow in both absolute and relative terms as the population ages and as advances are made in both diagnosis and treatment.

Sources:

  • Business Wire (December 22, 1994)
  • Zeneca Group (NYSE: ZEN)
  • Salick Health Care, Inc. (NASDAQ: SHCI)