ALBANY, N.Y., July 16, 2015 /PRNewswire/ -- AMRI (NASDAQ:
AMRI) today announced that it has acquired all the outstanding
shares of Gadea Pharmaceutical Group, a privately-held company
located in Valladolid, Spain,
specializing in technically complex active pharmaceutical
ingredients (APIs) and finished drug product. The purchase price
was $174 million, including the
issuance of 2.2 million shares of common stock to Gadea's owners,
valued at $43.8 million, with the
balance paid in cash and through the assumption of existing
debt.
"The acquisition of Gadea marks another milestone in our
company's path towards becoming the preeminent supplier of custom
and complex drug development services and product to both the
branded and generic pharmaceutical industry," said William S. Marth, AMRI's president and chief
executive officer. "This mutually beneficial transaction presents
an exciting opportunity for our two companies that builds upon our
growth, adding a strong portfolio of complex API that will augment
our existing capabilities and services, and new customer
relationships that will extend our global reach."
"Importantly, I am pleased to welcome Gerardo Gutierrez, Gadea's founder and chief
executive officer, who has joined our Board of Directors. With more
than 36 years of experience in the industry and nearly 25 years at
Gadea, Gerardo has demonstrated a track record of success in
innovation and management in specialty API and his continued
guidance will be invaluable to our efforts going forward. Mr.
Javier Gallo will be leading AMRI's
day to day operations in Spain in
his new position as managing director, reporting to Mr.
George Svokos, senior vice
president, API and chief commercial officer."
"For Gadea, this transaction will build on our company's proud
past and position it for a powerful future," said Mr. Gutierrez,
CEO of Gadea. "Our capabilities in technically challenging API and
diverse customer base are highly complementary to AMRI. With this
combination, we achieve our goal of being a comprehensive provider
of steroid API and gain access to the US market. I look forward to
joining the AMRI Board and working together to achieve our common
goals."
Strategic Benefits of the Transaction
- Gadea's Crystal Pharma division significantly expands AMRI's
marketable API portfolio and squarely positions the company as a
source of specialty and generic API.
Crystal's API
portfolio includes 22 active US Drug Master Files (DMFs), 17 EU
Certificate of Suitability (COSs), 13 Japanese DMFs and 2 South
Korean DMFs; with several APIs having filings in more than one of
these areas. Additionally, Crystal brings sterile API capabilities
which will complement AMRI's sterile drug product business.
- Gadea's portfolio further extends AMRI's API development and
manufacturing capabilities in steroids and hormones, providing the
company with a comprehensive steroid offering.
These API
are uniquely complex and provide high barriers to entry.
Gadea is also backward integrated to fermentation of certain
steroidal and hormonal intermediates and further develops other
families of non-steroidal final APIs.
- Acquisition augments AMRI's sterile drug product offerings
with the addition of ophthalmic and parenteral suspension dosage
forms and prefilled syringe and lyophilization
capability.
Gadea and its customers will be able to leverage
AMRI's end-to-end sterile drug product services from
pre-formulation to commercial filling of complex API.
- Establishes a strong European base for sales and operations
and significantly increases AMRI's presence into non-US
markets
Gadea brings a robust customer base and diverse
revenue stream, with over 400 customers selling into 70 countries.
With approximately 80% of revenue in non-US markets, Gadea provides
many new markets for AMRI. AMRI will be able to leverage its
strength in the U.S. markets with the addition of Gadea's
offerings.
Gadea, based in Valladolid, Spain, just north of Madrid, operates a highly regarded API and
finished dose development and manufacturing business with 2014
revenue of approximately $83 million
and 2014 adjusted EBITDA of approximately $17 million. Gadea is expected to continue to
operate independently within AMRI's API segment. On a stand-alone
basis, Gadea's forecasted full year 2015 revenue is estimated to be
between $80 million and $90 million,
with adjusted EBITDA of between $18 million
and $20 million, implying a purchase price multiple of
approximately 9 times 2015 adjusted EBITDA at the midpoint of the
range. Adjusted EBITDA excludes any deal related costs or purchase
accounting impacts. The transaction is expected to be immediately
accretive to AMRI's non-GAAP diluted earnings per share, with
nominal synergies. AMRI intends to provide an update to its 2015
financial guidance in mid-September
2015.
Transaction Details and Financing
The transaction was
signed and closed simultaneously. AMRI financed the transaction
through the issuance of 2.2 million shares ($43.8 million of value) of AMRI common stock, the
assumption of $33.2 million of net
debt, and $97.0 million cash
consideration. AMRI has secured $230
million of new Senior Secured Credit Facilities from
Barclays, a portion of which were used to fund the cash portion of
the transaction, repay AMRI's $75
million revolving credit facility and pay transaction
related fees and expenses. For details regarding the transaction
and the financing, please refer to the Form 8-K filed today with
the Securities & Exchange Commission. Barclays acted as
financial advisor to AMRI in the transaction and is the arranger
for the debt, which will be syndicated. Gomez-Acebo & Pombo
Abogados, S.L.P. and Goodwin Procter LLP acted as AMRI's legal
advisors.
The 2.2 million shares of AMRI common stock (the "Shares")
issued in connection with the transaction were offered and sold
outside the United States to an
eligible investor pursuant to Regulation S of the Securities Act of
1933, as amended (the "Securities Act"). The Shares have not been
registered under the Securities Act, or the securities laws of any
other jurisdiction, and may not be offered or sold in the United States absent registration under or
an applicable exemption from such registration requirements. This
press release does not constitute an offer to sell, or a
solicitation of an offer to purchase, the Shares in any
jurisdiction in which such offer or solicitation would be
unlawful.
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as
EBITDA, which is adjusted to exclude, among other things, the
impact of interest income and expense, depreciation and
amortization expense, and income tax expense or benefit. We exclude
these items from the non-GAAP financial measures because they are
outside our normal operations. There are limitations in using
non-GAAP financial measures, as they are not prepared in accordance
with generally accepted accounting principles, and may be different
than non-GAAP financial measures used by other companies. In
particular, we believe that the inclusion of supplementary non-GAAP
financial measures in this press release helps investors to gain a
meaningful understanding of our core operating results and future
prospects without the effect of these often-one-time charges, and
is consistent with how management measures and forecasts the
company's performance, especially when comparing such results to
prior periods or forecasts. Non-GAAP results also allow
investors to compare the company's operations against the financial
results of other companies in the industry who similarly provide
non-GAAP results. The non-GAAP financial measures included in this
press release are not meant to be considered superior to or a
substitute for results of operations prepared in accordance with
GAAP. It is not feasible to provide reconciliation to the most
comparable projected U.S. GAAP measure because the excluded items
are difficult to predict and estimate and are primarily dependent
on future events.
Conference Call and Webcast
AMRI will hold a
conference call at 8:30 a.m. ET on
July 16, 2015 to discuss the
transaction. The conference call can be accessed by dialing (866)
208-5728 (domestic calls) or (224) 633-1279 (international calls)
at 8:20 a.m. ET and entering passcode
85754326. A live webcast with slides will also be available and can
be accessed on the company's website at www.amriglobal.com. Replays
of the webcast can also be accessed for up to 90 days after the
call via the investor area of the company's website at
http://ir.amriglobal.com.
About AMRI
Albany Molecular Research Inc. (AMRI) is a
global contract research and manufacturing organization that has
been working with the Life Sciences industry to improve patient
outcomes and the quality of life for more than two decades. With
locations in North America,
Europe and Asia, our key business segments include
Discovery and Development Services (DDS), Active Pharmaceutical
Ingredients (API) and Drug Product Manufacturing. Our DDS segment
provides comprehensive services from hit identification to IND,
including expertise with diverse chemistry, library design and
synthesis, in vitro biology and pharmacology, drug
metabolism and pharmacokinetics, as well as natural products. API
Manufacturing supports the chemical development and cGMP
manufacture of complex API, including potent, controlled
substances, biologics, peptides, steroids and cytotoxic compounds.
Drug Product Manufacturing supports drug product development
through commercial scale production of complex liquid-filled and
lyophilized parenteral formulations. For more information about
AMRI, please visit our website at www.amriglobal.com or follow us
on Twitter (@amriglobal).
About Gadea Pharmaceutical Group
Gadea is a
Spanish group of affiliated companies dedicated to the technical
development and production of API and finished drug forms. Gadea's
Crystal Pharma business unit, is recognized as a leader in large
scale commercial API production, specializing in steroids, high
potency hormones and sterile steroids (by filtration).
Forward Looking Statements
This press release includes
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 that involve risks and
uncertainties. These statements include, but are not limited to,
statements regarding the acquisition of Gadea, the projected
revenue and non-GAAP EBITDA of Gadea, the potential synergies
associated with the transaction, the potential impact on AMRI's
operations and financial results, and statements made by the
company's chief executive officer and by Gadea's founder and chief
executive officer. Readers should not place undue reliance on our
forward-looking statements. The company's actual results may differ
materially from such forward-looking statements as a result of
numerous factors, some of which the company may not be able to
predict and may not be within the company's control. Factors that
could cause such differences include, but are not limited to, the
ability of the company to effectively integrate the Gadea
businesses; possible negative impacts to the revenue expected to be
received by the Gadea businesses; trends in pharmaceutical and
biotechnology companies' outsourcing of manufacturing services and
chemical research and development, including softness in these
markets; the termination of the royalties received by the Company
under the Allegra® license agreement, based on the expiration in
2015 of the patents underlying the license; the success of the
sales of other products for which the company receives royalties;
the risk that the company will not be able to replicate either in
the short or long term the revenue stream that has been derived
from the royalties payable under the Allegra® license agreements;
the risk that clients may terminate or reduce demand under any
strategic or multi-year deal; the company's ability to enforce its
intellectual property and technology rights; the company's ability
to obtain financing sufficient to meet its business needs; the
company's ability to successfully comply with heightened FDA
scrutiny on aseptic fill/finish operations; the results of further
FDA inspections; the company's ability to effectively maintain
compliance with applicable FDA and DEA regulations; the company's
ability to integrate past or future acquisitions, and make
such acquisitions accretive to the company's business model, the
company's ability to take advantage of proprietary technology and
expand the scientific tools available to it, the ability of the
company's strategic investments and acquisitions to perform as
expected, as well as those risks discussed in the company's Annual
Report on Form 10-K for the year ended December 31, 2014 as filed with the Securities
and Exchange Commission on March 16,
2015, and the company's other SEC filings. Revenue, adjusted
EBITDA and other financial guidance offered by senior management
today with respect to 2015 represent a point-in-time estimate and
are based on information as of July 15,
2015. Senior management has made numerous assumptions in
providing this guidance which, while believed to be reasonable, may
not prove to be accurate. Numerous factors, including those noted
above, may cause actual results to differ materially from the
guidance provided. The company expressly disclaims any current
intention or obligation to update the guidance provided or any
other forward-looking statement in this press release to reflect
future events or changes in facts assumed for purposes of providing
this guidance or otherwise affecting the forward-looking statements
contained in this press release.
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SOURCE AMRI