Royalty Pharma Moves Towards Internalization with RP Management Acquisition
Deal News | Jan 10, 2025 | RP Management LLC
Royalty Pharma plc has announced the acquisition of its external manager, RP Management, LLC, marking a significant shift towards an integrated corporate structure. This internalization is projected to yield substantial financial benefits, including cash savings exceeding $100 million in 2026 and $175 million by 2030, accumulating to over $1.6 billion over a decade. This transition is also expected to enhance shareholder alignment, corporate governance, and portfolio cash flow through extinguishing the management fee and vesting equity. In parallel, Royalty Pharma's board has sanctioned a $3 billion share repurchase program, with $2 billion intended for 2025, contingent on market conditions. Royalty Pharma's move is set to strengthen shareholder value, improve governance, and simplify its corporate model, potentially expanding its investor base and raising company valuation.
Sectors
- Biopharmaceutical Industry
- Financial Services
Geography
- United States – Royalty Pharma is based in New York, NY, and is listed on the Nasdaq, a US stock exchange.
Industry
- Biopharmaceutical Industry – Royalty Pharma operates in the biopharmaceutical sector, focusing on acquiring royalties from biopharmaceutical products.
- Financial Services – The acquisition and share repurchase program highlight activities within the financial services related to investments, asset management, and financial structuring.
Financials
- $1.1 billion – Total transaction value for the acquisition of RP Management, LLC by Royalty Pharma plc.
- $3 billion – Value of the share repurchase program approved by Royalty Pharma plc's Board.
- $100 million to $175 million annually – Projected annual cash savings from the acquisition of RP Management, starting in 2026 and increasing in 2030.
- $1.6 billion – Cumulative savings expected over the next ten years from the acquisition of RP Management.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| Royalty Pharma plc | Acquiring Company | Company | The largest buyer of biopharmaceutical royalties and a leading funder of innovation in the biopharmaceutical industry. |
| RP Management LLC | Target Company | Company | External manager of Royalty Pharma, handling all business and operations on behalf of Royalty Pharma. |
| Henry Fernandez | Lead Independent Director | Person | Lead independent director of Royalty Pharma's Board and CEO of MSCI Inc. |
| Pablo Legorreta | CEO & Founder | Person | Founder and CEO of Royalty Pharma, key figure in the company's strategic realignment and acquisition of RP Management. |
| Morgan Stanley & Co. LLC | Financial Advisor | Company | Financial advisor to the Board of Royalty Pharma plc. |
| Davis Polk & Wardwell LLP | Legal Counsel | Company | Legal advisor to the Board of Royalty Pharma plc. |
| Evercore | Financial Advisor | Company | Financial advisor to RP Management, LLC. |
| Akin Gump LLP | Legal Counsel | Company | Legal counsel to RP Management, LLC. |
| BofA Securities, Inc. | Financial Advisor | Company | Financial advisor to Royalty Pharma plc. |