I estimate (loosely) that Biovectra is worth somewhere between an extra nickel and a dime EPS in 2013. Margins in this business are MUCH lower (average 15-20%) than on Questcor's side (92%).
There may also be another 2-3 cents in reducing (or not increasing) Questcor's costs.
So I would put this accretion at 10 cents PLUS whatever growth can be achieved as the management of Biovectra works toward achieving the $50 million additional earn out (NOT chump change by any means). This is a multi-year arrangement (number of years???) but the simple calculation is to assume that they get 1/2 of any overage (would be very generous)...So the $50 million payout would be predicated on $100 million additional earnings...With Questcor getting the remaining $50 million (though already somewhat calculated in the above estimates). But using the $50 million (because I doubt the earn out = .50) divided by 50 million shares = $1.00 EPS over however many years the earn out is in force. Probably 5-7 but using 5 that's 20 cents a year EPS total (already includes above 10-13 cents per share).
Sentiment: Strong Buy
if you research Biovectra, you find that they were in a growth pause trying to figure out how to continue their strong growth. original investors had about 45 million invested, and new contracts required 16 million for additional facilities.
It's times like these that you;
a) look for new investors
b) go public (IPO)
c) get bought
C is always the easiest and fastest.
Note that expected business is why the agreement includes 50 million more, based on annual sales. Questcor effectively bought out the original investors and gave them 5 million profit, then told them to put 16 million into your new facilities and if you are successful, you get another 50 million.
I'm over simplifying, but you get the idea. There is an expectation they will continue to grow, and it's on their heads to do so.
They were also getting close to renegotiating the Acthar contract, so ya gotta wonder how much this really costs considering manufacturing price was going to go up.
Protecting an API process is definitely a bonus though. Won't discount that at all.
Just saying it looks like a win-win situation (pareto optimality).