Ascendis Health acquires two European firms for R7.3bn

24th May 2016

By: Creamer Media Reporter

  

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As part of its international growth strategy, JSE-listed Ascendis Health has acquired two major European health and care businesses, Remedica Holdings and Scitec International, for a combined R7.3-billion.

“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 (EU) 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 Africa-based business,” Ascendis CEO Dr Karsten Wellner said on Tuesday.

He added that the acquisitions would increase Ascendis’ earnings a share by more than 50%.

Following the acquisitions, about half of Ascendis’ sales would be generated by foreign operations and products would be sold in about 144 countries.

The company would pay R4.4-billion to acquire Cyprus-based generic pharmaceutical manufacturer Remedica, which supplied more than 300 pharmaceutical products to about 100 countries in the Middle East, Asia, Africa and South America.

Remedica manufactured its products at five Good Manufacturing Practice-accredited manufacturing facilities in Cyprus, including a newly built world-class oncology facility. The business had a strong pipeline of specialty disease drugs, particularly oncology and HIV, which were expected to be launched over the next three years.

“Remedica will transform Ascendis’ Pharma-Med division into an international pharma player.

“The business creates a strategic platform for international expansion and growth in the generic pharmaceutical industry in both 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,” said Wellner.

Meanwhile, Ascendis would acquire Scitec, which marketed a range of sports nutrition products in nearly 90 countries, for R2.9-billion. Scitec’s manufacturing facility in the EU produced more than 280 products.

“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 research and development, production and the procurement of whey protein,” noted Wellner.

The two transactions would be funded through a combination of new debt facilities of about €180-million, a fully underwritten rights offer of about R1.2-billion and vendor placements of about R1.2-billion. The International Finance Corporation (IFC), a member of the World Bank Group, had committed $30-million, while another international investor committed R180-million as part of the vendor placement.

“The introduction of the IFC as a strategic long-term shareholder illustrates Ascendis’ global development and we believe [it] is an endorsement of our international strategy based on great health and care brands,” stated Wellner.

The transactions are subject to shareholder and regulatory approvals, including the JSE and the South African Reserve Bank.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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