Recipharm creates a global CDMO leader through SEK 1.7 billion strategic acquisitions in the US, Sweden and India
The company signs two separate agreements to acquire Kemwell’s pharmaceutical contract development and manufacturing (CDMO) businesses.
The first acquisition, comprising US and Swedish operations, is expected to close during the second quarter 2016, after review by the Swedish Competition Authority, while the second, comprising operations in India, is conditional on governmental approvals and expected to close before year end. The transactions will be financed by already available funds, existing credit facilities, a share issue in kind to the sellers and a proposed share issue of approximately SEK 850 million with preferential rights for existing shareholders.
Highlights
- Major extension of Recipharm’s capabilities in India
- Provides access to significant cost-effective development operation working with customers with strong US ANDA project pipeline
- Adds US FDA and EU approved cost effective manufacturing options
- Expands manufacturing capabilities, complementary technology to Nitin Lifesciences
- Further strengthens Recipharm’s synergistic business model by aligning US and Indian development and technology operations with the combined company’s manufacturing capabilities in India and Europe. In addition, there are potential commercial synergies from enhanced customer offering and cross selling
- Well established API and dose form manufacturing facilities in Sweden with opportunities for substantial cost savings and operational synergies
- Strong combined cash flow generation expected to maintain financial profile in-line with financial targets
- A share issue in kind of class B shares in Recipharm corresponding to a value of USD 55 million (SEK 450 million), subject to approval by the Extra General Meeting, and a proposed share issue of approximately SEK 850 million with preferential rights for existing shareholders.
US and Sweden transaction
India transaction
Thomas Eldered, CEO of Recipharm AB said: “These transactions represent a significant step in both the consolidation of the CDMO industry and the transformation of Recipharm into a global leader. We now have a US footprint which we can use to further penetrate the world’s largest pharmaceutical market and the business in Sweden provides us with several opportunities for synergies. When we receive the approval in India, Recipharm’s customers will have access to very cost effective development and manufacturing capabilities able to serve international markets including the US. I am extremely excited about these acquisitions and the benefits they will bring. The current Managing Director, Anurag Bagaria, and VP Corporate Development, Karan Bagaria, will continue in their current positions post closing and I am very much looking forward to working with them.”
Anurag Bagaria, Managing Director of Kemwell commented: “I am delighted about the combination of Kemwell’s pharmaceutical business with Recipharm, both of which have many complementary capabilities. I am confident that together we will be even more successful and we look forward to building on our combined strengths.”
PerÅke Oldentoft, Chairman of Kemwell AB and Managing Director of Kemfin commented: “I am really excited about the combination of the companies and I am sure that under the Recipharm umbrella the business will continue to grow and provide high quality products and services to its customers.”
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