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.
- The combined entity will have a significantly enhanced reach and scale. The businesses to be acquired had 2015 preliminary net sales of approximately SEK 745 million, corresponding to 22 per cent of Recipharm’s 2015 total net sales.
- The acquisitions are expected to be accretive to EBITDA margin already from 2016 and are well in line with Recipharm’s overall financial objectives.
- Adds US operational presence with strong development capabilities, enhanced technology base and broad customer portfolio, providing improved access to the world’s largest pharma market.
- Expands position in emerging markets significantly, taking sales in these markets to more than SEK 800 million, dominated by sales directly to the fast-growing pharma market in India.
- Major extension of Recipharm’s capabilities in India;
o Adds US FDA and EU approved cost effective manufacturing options;
o Expands manufacturing capabilities, complementary technology to Nitin Lifesciences.
o 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.
o 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