Oaktree SPAC to merge with pharmaceutical company in $2 billion deal

Oaktree Acquisition Corp. II will merge with Alvotech Holdings, a global biopharmaceutical company, to take the company public in the United States. The deal values ​​the combined company at approximately $2.25 billion, including debt.

The downtown-based blank check company is a special purpose acquisition company (SPAC) and a subsidiary of investment manager Oaktree Capital Management. A SPAC is a shell company that merges with a private company and takes it public by circumventing a traditional initial public offering. When the Alvotech deal closes, the combined company’s securities are expected to trade on the Nasdaq under the symbol ALVO.


Alvotech will raise gross proceeds of over $450 million, including a $150 million equity placement led by investors including New York-based Suvretta Capital Management, Luxembourg-based CVC Capital Partners and Temasek Holdings Ltd. , based in Singapore. It also includes $250 million in cash from Oaktree Acquisition’s trust account and a $50 million equity commitment from existing shareholders, assuming no redemptions.


The transaction provides for earn-out clauses linked to the market price of the shares of the combined company, reflecting an alignment of interests with the shareholders. The transaction has been unanimously approved by the boards of directors of Alvotech and Oaktree Acquisition Corp. II subject to customary closing conditions. The transaction is expected to be finalized in the first half of 2022.


Alvotech, based in Reykjavik, Iceland, was founded in 2013 to develop and manufacture affordable biosimilar medicines, which are biologics that have no clinically significant difference from an existing approved biologic used to treat challenging conditions .


The company has already established partnerships with pharmaceutical companies in 60 countries, including Teva Pharmaceutical Industries Ltd. and Stadium.


Global biologics and biosimilars markets are expected to grow at a compound annual growth rate of 10%. By 2026, biologics are expected to reach approximately $555 billion, according to Evaluate Pharma data provided by Alvotech and Oaktree Acquisition Corp. II. Biosimilar drugs are expected to reach around $80 billion by the same year, according to data collected by Frost & Sullivan.


“The Oaktree Acquisition Corp. franchise was created to identify and partner with high-quality, growing companies that are making breakthrough advancements in their respective industries, and Alvotech is fully aligned with its significant contributions to sustainability within healthcare ecosystem,” Howard said. Marks, co-chairman of Oaktree Capital Management, in a statement.


Deutsche Bank Securities Inc. acted as financial advisor and capital markets advisor to Oaktree Acquisition in connection with the transaction, while Morgan Stanley & Co. and Credit Suisse Group acted as financial advisors to Alvotech.


Oaktree Acquisition Corp. It raised $225 million in an IPO in 2020.
In March 2019, Oaktree Capital sold a 62% stake valued at $4.7 billion in its global asset management company to Brookfield Asset Management Inc., a Toronto-based alternative asset management company.

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