Ascendis Health has announced the separate acquisitions of two major European health and care businesses, Remedica Holdings and Scitec International.
Remedica, a generic pharmaceutical manufacturer based in Cyprus, will be acquired for c.R4.4 billion (€260 million) in addition to a maximum earn-out of c.R1.3 billion (€75 million) after three years. Scitec International, a leading European sports nutrition company will be acquired for R2.9 billion (€170 million).
Dr Karsten Wellner, Ascendis Health CEO, comments: ‘Our strategy is to complement growth in the domestic health and care market through international expansion and by acquiring platform businesses offshore. These acquisitions in the European Union will be game changing for Ascendis and position us as an international health and care business of scale, offering an excellent Rand hedge for our South African-based business.’
A positive forecast
Following the acquisitions, approximately half of Ascendis’ sales will be generated by foreign operations and products will be sold in c.144 countries. The company completed its first offshore acquisition in August 2015 with the purchase of an initial 49 percent stake in Farmalider.
Dr Wellner says the two acquisitions are expected to have a material financial impact and increase the company’s earnings per share by greater than 50 percent, as demonstrated through Ascendis Health’s announced pro-forma financials.
Leading global pharma industry player
Remedica supplies over 300 generic pharmaceutical products to c.100 countries, primarily in emerging markets including the Middle East, Asia, Africa and South America. It supplies essential medicines such as malaria treatment and antibiotics to global non-governmental organisations, including reputable institutions such as the World Health Organisation, Médecins Sans Frontières and the International Red Cross.
The Cyprus-based company manufactures its products at five GMP accredited manufacturing facilities throughout, including a newly constructed world-class oncology facility. The business has a strong pipeline of specialty disease drugs, particularly oncology and HIV, which are expected to be launched over the next three years.
‘Remedica will transform Ascendis’ pharma-med division into an international pharma player,’ comments Dr Wellner. ‘The business creates a strategic platform for international expansion and growth in the generic pharmaceutical industry, both in Europe and emerging markets. The manufacturing facilities can also be used by our other recently acquired pharma businesses: Akacia Healthcare in South Africa; and Farmalider in Spain.’
He adds that Remedica has a strong management team, with the CEO committed to remaining in the business for at least the next three years.
Leading European sports nutrition brand
Scitec Nutrition ranks among the top sports nutrition brands in Europe, with a key presence in major markets like Germany, France, Spain, Italy, Hungary and Poland. The company’s products are also well represented in the Middle East, Russia, Australia and Asia, with sales recently launched in the USA.
Its wide range of sports nutrition products, targeted at functional fitness, strength training and well-being, are marketed in nearly 90 countries worldwide. Scitec is vertically integrated and owns a modern manufacturing facility in the European Union, where the company produces over 280 products. The facility, which is GMP certified and US FDA registered, has recently been upgraded to increase capacity for growth.
‘Scitec Nutrition is a great brand and is well established in key global sports nutrition markets. This acquisition complements our global strategy as it provides a platform for international expansion in the sports nutrition and wellness industry,’ comments Dr Wellner. ‘We will have the opportunity to accelerate the offshore expansion of the Ascendis’ sport nutrition brands, Evox and SSN, and will look to grow Scitec’s sales in Africa. The acquisition also provides the opportunity to extract synergies in R&D, production and the procurement of whey protein.’
Sealing the deals
The two transactions will be funded through a combination of new debt facilities of c.€180 million, a fully underwritten rights offer of c.R1.2 billion and vendor placements totalling c.R1.2 billion. The International Finance Corporation (IFC), a member of the World Bank Group, has committed US$30 million while another international investor has committed R180 million as part of the vendor placement.
He adds, ‘The introduction of the IFC as a strategic long-term shareholder illustrates Ascendis’ global development and we believe is an endorsement of our international strategy based on great health and care brands.’
The transactions are subject to shareholder and regulatory approvals, including the JSE and SA Reserve Bank. Ascendis shareholders representing c.63 percent of the shares in issue have formally supported the transactions. The effective date of the transactions is expected to be 1 August 2016.