HIG Acquires Zicam Maker
Matrixx comes to a $15 million settlement agreement over its OTC drug Zicam as it simultaneously accepts a $75.2 million offer.
December 14, 2010
Private equity firm HIG Capital, offered Zicam manufacturer Matrixx Initiatives, $8 per share for its outstanding shares. The deal is valued at $75.2 million.
According to the agreement, the company has a “go-shop” period which ends January 22, 2011 at 11:59 pm. If the company decided to take another offer the break-up fee is $3 million.
In a research note found on Thomson One Analytics, Roth Capital Partners analysts stated that the offer is a "fair minimum bid" and the chances of another bidder stepping up is unlikely given that the Zicam brand remains a litigation risk.
For several years Matrixx has been in out of court over claims that some consumers lost their sense of smell after using Zicam. In 2006, the company dished out $12 million in a settlement and today the company stated that it will pay $15.5 million in a nationwide personal injury litigation.
Roth analysts noted that if it weren't for the legal issues, the company could bring in a better price of between $13 to $14 per share.
An industry analyst agreed and added that H.I.G is getting a “steal of a deal.” Either way the company is a bit too small for a large strategic like GlaxoSmithKline to come in for a bid. If anything he said it would be another financial buyer and so far there are no signs of another private equity suitor sniffing around.
Calls to HIG seeking comment were not returned by press time.
Sawaya Seagalas & Co is running the process for the NASDAQ-listed company.
Sullivan & Cromwell and Snell & Wilmer are acting as legal counsel to Matrixx. Kirkland & Ellis is acting as legal counsel to H.I.G.
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