ALBANY, N.Y., May 5, 2016 /PRNewswire/ --
- Enters definitive agreement to acquire Euticals for
$358 million in stock, cash and a
seller note
- Positions AMRI as one of the largest independent developers and
suppliers of API to the pharmaceutical industry
- Significantly expands AMRI's presence in the European
community
- Transaction expected to be accretive to AMRI's 2016 non-GAAP
diluted EPS
- AMRI's 2017 pro forma revenue expected to exceed $750 million, with 2017 adjusted EBITDA margins
of 20%
AMRI (NASDAQ: AMRI) today announced that it has signed a
definitive agreement to acquire all outstanding shares of Prime
European Therapeuticals S.p.A., also known as "Euticals", in a
transaction valued at approximately $358
million (EUR 315 million),
consisting of shares of AMRI common stock, cash, and a seller
note.
Euticals is a privately-held company headquartered in
Lodi, Italy, specializing in custom synthesis and
the manufacture of active pharmaceutical ingredients (APIs). It
operates a network of API facilities primarily in Italy, Germany, U.S. and France.
"The acquisition of Euticals will provide us an established
custom synthesis presence in Europe and will further build on our expertise
in complex APIs, positioning AMRI as a preeminent provider of
contract research, development and manufacturing services to the
pharmaceutical industry," said William S.
Marth, AMRI's president and chief executive officer.
"Euticals' expertise with niche and high barrier to entry
technologies and products, including certain tetracyclines,
monobactams, sterile and fermented APIs and controlled substances,
will be a tremendous asset to us. Additionally, Euticals' large
base of over 400 customers will provide us with a number of new
large pharma, biotech and generics partners, further extending our
global reach and diversifying our revenue.
"Importantly, I am pleased that in connection with the closing
of the transaction, Fernando
Napolitano will be joining our Board of Directors on behalf
of Lauro Cinquantesette, S.p.A (Lauro 57) and its majority
investors, Clessidra Capital Partners II and Mandarin Capital
Partner SCA SICAR. Clessidra's and Mandarin's combined
expertise, deep contacts within the European pharmaceutical
community and continued guidance will be invaluable to our efforts
going forward. Margalit Fine,
Euticals' chief executive officer and former head of European API
at Teva, will be leading Euticals' operations as a senior executive
for the combined company," Mr. Marth said.
"On behalf of Lauro 57 and its investors, we couldn't be more
pleased to be joining AMRI," said Clessidra Chief Executive
Officer, Maurizio Bottinelli. "Its
expertise in developing and manufacturing complex pharmaceutical
products is well known and we look forward to joining forces to
further expand our presence in the European community."
Strategic Benefits of the Transaction
- Significantly expands AMRI's capabilities in custom and
complex APIs
- Provides AMRI with an established European custom synthesis
presence
- Expands expertise in multiple areas: sterile API, steroids,
generics, fermentation, controlled substances and monobactams
- Provides an API portfolio that includes 50 active US Drug
Master Files (DMFs), 17 EU Certificates of Suitability (COS) or
Compliance with the European Pharmacopeia (CEP), 13 Japanese
DMFs and 6 South Korean DMFs; with several APIs having filings in
more than one of these areas and over two dozen other international
filings
- Provides AMRI with global scale and a diverse customer and
revenue base
- Euticals brings over 400 customers with no customer
concentration
- With 75% of revenue outside North
America, Euticals opens up many new markets for AMRI; more
than half AMRI's combined proforma revenue is expected to be ex
U.S.
- Euticals brings additional portfolio diversification in
generics; AMRI to leverage U.S. base to include Euticals' strong
generic portfolio
Euticals operates a highly regarded API, custom synthesis and
fine chemical development and manufacturing business with 2015
revenue and EBITDA of approximately $245
million and $27 million
respectively. On a stand-alone basis, Euticals' full year 2016
revenue is forecast to be between $245
million and $255 million, with adjusted EBITDA1
of between $34 million and $38
million, implying a purchase price multiple, prior to
anticipated synergies, of approximately 9.9 times 2016 adjusted
EBITDA at the midpoint of the range and excluding deal related
costs or purchase accounting impacts. The transaction is expected
to be accretive to AMRI's 2016 non-GAAP diluted earnings per share.
AMRI expects to generate operational synergies of $13 to $15 million over the next three years. On
a pro forma basis including synergies, AMRI's full year 2017
revenue is forecast to exceed $750
million, with adjusted EBITDA margins of approximately
20%.
Transaction Details, Financing and Closing
AMRI
expects to finance the transaction through the issuance of
approximately 7 million shares of AMRI common stock (currently
valued at $110 million, equal to
approximately 19.75% of AMRI common stock); a seller note of
$63 million; and the remainder in
cash. Including Euticals, AMRI believes that it will have the
financial strength to manage its increased debt and plans to
de-lever based on a combination of EBITDA growth and/or principal
re-payments.
AMRI has entered into debt financing commitments with JP Morgan
and Barclays for amounts that are expected to be sufficient to
provide funds necessary to consummate the transaction. In addition
to the financing, the closing of the transaction is subject to
customary closing conditions, including Hart-Scott-Rodino clearance
in the U.S.
The 7 million shares of AMRI common stock (the "Shares") to be
issued in connection with the transaction will be offered and sold
outside the United States to Lauro
57, 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.
Nomura acted as exclusive financial advisor to AMRI in
connection with this transaction and Goodwin Procter LLP and LCA
Studio Legale acted as AMRI's legal advisors. Lincoln International
acted as sole financial advisor to Lauro 57, and Chiomenti Studio
Legale and Debevoise & Plimpton LLP acted as Lauro 57's legal
advisors.
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 today
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 4868381. 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 (DPM). 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 supports the chemical development and cGMP
manufacture of complex API, including potent and cytotoxic
compounds, controlled substances, steroids, hormones, and sterile
API. DPM supports development through commercial scale production
of complex liquid-filled and lyophilized parenterals, sterile
suspensions and ophthalmic formulations. For more information about
AMRI, please visit our website at www.amriglobal.com or follow us
on Twitter (@amriglobal).
About Euticals
Established in 1984, Euticals is a
chemical company focused on Active Pharmaceutical Ingredients
(APIs), Custom Synthesis and Fine Chemicals projects and
products.
Today Euticals Group is one of the leading players in the
Pharmaceutical & Fine Chemicals Industry with a global scale
production and diversified manufacturing plants, offering multiple
technology platforms.
Euticals' mission is to be the partner of choice for
pharmaceutical and related chemical industries, by supplying its
API portfolio and providing custom manufacturing and custom
synthesis with large industrial capacity and broad R&D
developmental capabilities.
Forward Looking Statements
This press release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and
other federal securities laws that involve risks and uncertainties.
These statements include, but are not limited to, statements
regarding the acquisition of Euticals, the projected revenue and
non-GAAP EBITDA of Euticals, the potential synergies associated
with the transaction, the potential impact on AMRI's operations and
financial results and its accretive nature, and statements made by
AMRI's chief executive officer and a principal investor of
Euticals, the expected timing for the closing of the transaction
and AMRI's expectations for financing the transaction, including
the type of such financing; expectations regarding Euticals
employees joining AMRI following the closing of the transaction and
the contributions and responsibilities of those employees to AMRI's
and Euticals' continued operations, the appointment of Fernando Napolitano to the AMRI board of
directors after closing, the sufficiency of committed debt
financing and AMRI's existing cash to finance the transaction,
repay AMRI's current credit facilities and pay fees and expenses
related to the transaction. Readers should not place undue reliance
on our forward-looking statements. AMRI's actual results may differ
materially from such forward-looking statements as a result of
numerous factors, some of which AMRI may not be able to predict and
may not be within AMRI's control. Factors that could cause such
differences include, but are not limited to, the ability of AMRI to
effectively integrate the Euticals businesses; possible negative
impacts to the revenue expected to be received by the Euticals
businesses; trends in pharmaceutical and biotechnology companies'
outsourcing of manufacturing services and chemical research and
development, including softness in these markets; the success of
the sales of other products for which AMRI receives royalties; the
risk that clients may terminate or reduce demand under any
strategic or multi-year deal; AMRI's ability to enforce its
intellectual property and technology rights; AMRI's ability to
obtain financing sufficient to meet its business needs; AMRI's
ability to successfully comply with heightened FDA scrutiny on
aseptic fill/finish operations; the results of further FDA
inspections; AMRI's ability to effectively maintain compliance with
applicable FDA and DEA regulations; AMRI's ability to integrate
past or future acquisitions, and make such acquisitions
accretive to AMRI's business model, AMRI's ability to take
advantage of proprietary technology and expand the scientific tools
available to it, the ability of AMRI's strategic investments and
acquisitions to perform as expected, as well as those risks
discussed in AMRI's Annual Report on Form 10-K for the year ended
December 31, 2015 as filed with the
Securities and Exchange Commission on March
30, 2016, and AMRI's other SEC filings. Revenue, adjusted
EBITDA, accretion and other financial guidance offered by senior
management today with respect to 2016 and 2017 represent a
point-in-time estimate and are based on information as of
May 4, 2016. 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. AMRI 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.
1 EBITDA reflects IFRS with an adjustment to U.S.
GAAP only for capitalization of R&D expenses
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SOURCE AMRI