Emergent Respiratory Products, Inc.
Negotiating Complex Deal Structures, with Upside for our Clients
Client: Emergent Respiratory was acquired by Bespak plc (LSE: BPK) in a Two-Stage Purchase
Transaction: In February 2007, a letter of intent was signed with U.K.-based Bespak to acquire California-based Emergent Respiratory in a two-stage purchase.
The Burnham Solution: Burnham served as advisor to Emergent Respiratory in the sale of its technology-based emergency respirators. In order to protect Emergent’s competitive interests, Burnham carefully approached a small pool of potential bidders and ran a controlled process that incrementally revealed information as talks proceeded
Burnham negotiated the structure of the sale to provide immediate investment and strategic support from the buyer while providing significant upside potential for Emergent’s investors. The first stage, which closed in April 2007, was the sale of approximately 50% of Emergent at a price that values the company at a very rich revenue multiple, despite the fact that Emergent has yet to reach profitability.
Over the next three years, Bespak has the option to purchase the remaining interest in Emergent according to a set formula, with strong protections built in for our client. At the end of that three-year window, Bespak must purchase the remaining shares at a fixed multiple, for total consideration of up to $38 million.