Goodwin’s Public M&A team advised Morgan Stanley & Co. LLC as financial advisor to Royalty Pharma plc (“Royalty Pharma”, NASDAQ: RPPX) as it entered into an agreement to acquire its external manager, RP Management, LLC (“RP Management”), in a transaction valued at approximately $1.1 billion. Under the terms of the agreement, Royalty Pharma will pay $200 million in cash (inclusive of management fees payable in 2025), issue approximately 24.5 million shares of Royalty Pharma stock and assume $380 million of RP Management debt in exchange for all of the outstanding membership interests in RP Management.
The transaction is expected to close in the second quarter of 2025, subject to the satisfaction of customary closing conditions, including receipt of approval by Royalty Pharma’s shareholders for the share issuance, as well as required regulatory approvals.
Royalty Pharma (NASDAQ: RPPX), founded in 1996, is the largest buyer of biopharmaceutical royalties and a leading funder of innovation across the biopharmaceutical industry. Royalty Pharma funds innovation in the biopharmaceutical industry both directly and indirectly - directly when it partners with companies to co-fund late-stage clinical trials and new product launches in exchange for future royalties, and indirectly when it acquires existing royalties from the original innovators.
RP Management has externally managed Royalty Pharma since Royalty Pharma’s founding, and the RP Management conducts all aspects of Royalty Pharma’s business and operations. RP Management is currently owned by Royalty Pharma CEO Pablo Legorreta and other members of senior management. Prior to this transaction, Royalty Pharma had no employees but instead relied on the employees of RP Management to manage the business. Royalty Pharma currently pays the RP Management a quarterly management fee of 6.5% of Portfolio Receipts and 0.25% of the value of security investments. The management fee expense is reported within general and administrative expenses in Royalty Pharma’s consolidated statements of operations and the cash paid is reported as payments for operating and professional costs on its consolidated statements of cash flows and non-GAAP reporting. Following the closing of the internalization transaction, Royalty Pharma will cease to be externally managed and will operate as an integrated company with all current employees of the Manager becoming employees of Royalty Pharma.
The Goodwin team was led by Rob Masella, Mike Patrone and Amanda Gill, and included Deb Birnbach, Andrew Harrow, Will Wang and Maria Dragun.
For additional details on the transaction, please read Royalty Pharma’s press release and coverage in Reuters.