(Reuters) -Royalty Pharma said on Friday it would pay about $1.1 billion to acquire RP Management, an organization that manages the healthcare firm’s operations, as it seeks to simplify its corporate structure.
Royalty Pharma buys royalties of future drugs from academic labs and biotechnology companies, which in turn use the cash to fund their research. Its shares were up 3.8% in premarket trading.
RP Management has externally controlled and managed the operations of Royalty Pharma since it was founded in 1996. The firm did not recruit employees of its own and relied on RP Management’s staff to run its business in exchange of a quarterly fee.
After the deal closes, Royalty Pharma will operate as an integrated company, with all the current employees of RP Management becoming employees of the New York-based firm.
Royalty Pharma’s board also authorized a $3 billion share repurchase program.
“We expect these actions to drive shareholder value creation over the long term,” said Henry Fernandez, lead independent director of Royalty Pharma’s board.
(Reporting by Bhanvi Satija and Christy Santhosh in Bengaluru; Editing by Shilpi Majumdar)
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