Pharmaceutical manufacturer and supplier Aspen has concluded an agreement to sell its global nutritional business to France-based multinational dairy corporation Lactalis Group for a fully funded cash consideration of €739.8-million, or about R12.9-billion.
The company disclosed this during a presentation of its strong results for the financial year ended June 30.
The nutritional business sells infant milk products in Latin America, sub-Saharan Africa and Asia-Pacific.
The disposal will enable Aspen’s business units in these regions to focus on the group’s core pharmaceuticals portfolio, which is expected to drive increased business efficiency and performance.
The nutritional business contributed R3.09-billion to the group’s revenue and R512-million to the group’s profit for the year.
“While the nutritional business has been a very valuable contributor to Aspen, its disposal is an important step for us, moving to creating absolute focus around our pharmaceuticals business, and creating returns value to the company which we can deploy in other investments,” Aspen deputy CE Gus Attridge told Engineering News Online.
The balance of the proceeds from the transaction, after costs and taxes, will be used to reduce Aspen’s gearing, creating greater headroom and capacity.
The transaction is conditional on the fulfilment of a number of conditions; and is anticipated to be completed within the next six months.
Aspen CE Stephen Saad said the group received significant global and regional responses for the nutritional business, of which the Lactalis offer was accepted owing to the value it presented for shareholders of Aspen and Lactalis, and the best opportunity for transferring Aspen employees.
Lactalis boasts extensive experience in dairy with a 5% stake in the global dairy market; and is a family-owned, entrepreneurial company, he noted.
Aspen’s revenue for the financial year increased by 3% to R42.6-billion. The group declared a 10% higher dividend of 315c, payable on October 8.
“We have demonstrated in the past year underlying organic growth of the commercial pharmaceutical business, especially in emerging markets, and we hope to continue to grow this in a 3% to 5% range, with this as our key driver,” said Attridge.
He also highlighted strong growth in China, which he notes is now the third-biggest contributor to the group’s sales, behind South African and Australia.
This was also the first year the group enjoyed the full benefits of anaesthetics portfolio acquisitions acquired in the prior year; which showed “very good growth”.
Aspen celebrates 20 years on the JSE this year, over which time the company has evolved from a domestic generics entity to a global multinational targeting niche products that are difficult to manufacture and replicate. This has been evidenced by acquisitions of anaesthetics and thrombosis portfolios in recent years.