The downtown-based blank check company is a special purpose acquisition company (SPAC) and affiliate 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 is complete, the combined company’s securities are expected to be traded on the Nasdaq under the symbol ALVO.
Alvotech will get gross proceeds in excess of $450 million, including a $150 million equity placement led by investors such as New York-based Suvretta Capital Management, Luxembourg-based CVC Capital Partners and Singapore-based Temasek Holdings Ltd. 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 stipulates earn-out provisions connected to the trading price of the combined company’s shares, reflecting an alignment of interest with shareholders. The transaction has been unanimously approved by the boards at both Alvotech and Oaktree Acquisition Corp. II subject to customary closing conditions. The transaction is expected to close in the first half of 2022.
Alvotech, based in Reykjavik, Iceland, was founded in 2013 to develop and manufacture affordable biosimilar medicines, which are biological products that have no clinically meaningful difference from an existing approved biologic used to treat difficult conditions.
The company has already partnered with pharmaceutical companies in 60 countries, including Teva Pharmaceutical Industries Ltd. and Stada.
The global markets for biologic and biosimilar medicines are forecasted to grow at a 10% compound annual growth rate. By 2026, biologics are expected to hit an estimated $555 billion, according to Evaluate Pharma data provided by Alvotech and Oaktree Acquisition Corp. II. Biosimilar medicines should reach approximately $80 billion by the same year, according to data gathered by Frost & Sullivan.
“The Oaktree Acquisition Corp. franchise was formed to identify and partner with high-quality, growing companies that are making pivotal strides in their respective industries, and Alvotech is a clear fit with its meaningful contributions to sustainability within the healthcare ecosystem,” said Howard Marks, co-chairman of Oaktree Capital Management, in a statement.
Deutsche Bank Securities Inc. served as financial adviser and capital markets adviser to Oaktree Acquisition on the deal while Morgan Stanley & Co. and Credit Suisse Group served as financial advisers to Alvotech.
Oaktree Acquisition Corp. II 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 firm to Brookfield Asset Management Inc., a Toronto-based alternative asset management company.