- Purchase price of $765 million
- Strengthens core livestock business
with industry-leading vaccines and pharmaceuticals for farmed fish,
the fastest growing segment of animal health industry
- Gains late-stage pipeline anticipated
to bring several new products to market in the near term
- Affirms value creation strategy to
deploy capital to strengthen the portfolio and support future
growth
Zoetis Inc. (NYSE:ZTS) today announced an agreement to purchase
PHARMAQ, the global leader in vaccines and innovation for health
products in aquaculture, for a price of $765 million on a debt-free
basis. Acquiring PHARMAQ strengthens Zoetis’ core livestock
business, giving the company a market-leading presence in the
fastest growing segment of the animal health industry. Zoetis is
purchasing PHARMAQ from a company owned by Permira IV, a fund
managed by the global investment firm Permira, which has been the
majority owner of the company since 2013.
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PHARMAQ is the market leader in sales of vaccines for farmed
fish, a market segment growing 10% annually. The company generated
revenues of approximately $80 million in 2014 and has a presence in
the major aquaculture markets in the world. PHARMAQ revenue grew at
a compound annual growth rate of 17% from 2005 to 2014.
Privately-held PHARMAQ has approximately 200 employees, is based in
Oslo, Norway, and has subsidiaries in Chile, the United Kingdom,
Vietnam, Spain, Turkey, Panama, and Hong Kong.
“This acquisition is a great strategic fit that brings to Zoetis
an animal health leader with similar competitive advantages – an
industry-leading portfolio, strong customer relationships, and
world-class innovation and manufacturing,” said Zoetis Chief
Executive Officer Juan Ramón Alaix. “We are gaining a new platform
for growth and value creation that we can expand. PHARMAQ
strengthens our core livestock business by providing market
leadership in aquatic health and a strong late-stage pipeline in
the world’s largest category of protein and fastest growing animal
health market.”
“We see a tremendous opportunity to grow our business as part of
Zoetis,” said Morten Nordstad, Chief Executive Officer at PHARMAQ.
“Zoetis has proven expertise in supporting livestock producers with
high-quality products and technical services that help improve
animal health, productivity and profitability. By combining our
experience and R&D capabilities, we believe we can optimize our
industry-leading ability to develop vaccines and medicines for
farmed fish. With Zoetis’ global footprint, we can deliver greater
value to more customers around the world and accelerate our
geographic expansion plans. This acquisition is a testimony to our
success and to the highly skilled, innovative and hard-working
employees of PHARMAQ.”
PHARMAQ’s well-respected R&D organization addresses many of
the most pressing health needs of the aquaculture industry. Its
late-stage development pipeline includes important new vaccines and
next-generation parasiticides expected to enter the Norwegian,
Chilean and UK markets in the near term.
Aquatic Health – The Fastest Growing Animal Health
Segment
The market for aquatic health products serving aquaculture was
valued at approximately $400 million in 20141 and has been growing
7 to 8% annually.1 This growth rate is faster than the overall
livestock segment, which is growing at 6% CAGR, and the companion
animal segment, which is growing at 5% CAGR.2
Fish remains the most consumed animal source of protein
worldwide. Farmed fish accounts for about 50% of total fish
consumption up from 15% in 1990.3 Moreover, current medicalization
rates for fish rank at the lowest level of any livestock category.
Healthcare spending is expected to increase as productivity of fish
farming becomes more efficient to address the rising global demand
for protein.
Addressing Growing Demand for Customized Aquatic Health
Solutions
With this acquisition, Zoetis adds vaccine brands such as
AlphaJect® (an injectable vaccine) to its diverse portfolio of more
than 300 product lines. It also adds parasiticides such as
AlphaMax® to protect farmed salmon from sea lice. PHARMAQ
diagnostic products complement the Zoetis diagnostics business and
support customers with early detection of infection and rapid
response through more customized solutions. PHARMAQ also provides
dip/immersion vaccines, therapeutics, and technical support
services tailored to the needs of farmed fish operations.
“We are excited to welcome the team from PHARMAQ, who share our
passion for supporting customers and keeping livestock healthy and
productive,” said Alejandro Bernal, Executive Vice President,
Strategy, Commercial and Business Development for Zoetis. “To
ensure its continued success, the PHARMAQ business will run largely
as a stand-alone operation within Zoetis and maintain its focus on
critical customer needs and R&D milestones.”
Zoetis expects to complete the acquisition on or about Nov. 10,
2015, and it intends to draw on its revolving credit facility to
finance the transaction. Inclusive of financing costs, Zoetis
expects the transaction to be neutral to adjusted earnings in 2016
and become accretive to adjusted earnings thereafter.
Zoetis will discuss the transaction on its regularly scheduled
third quarter financial investor conference call tomorrow, Nov. 3,
at 8:30 a.m. (EST). Investors and the public may access the live
webcast by visiting the Zoetis website at
http://www.zoetis.com/events-and-presentations. A replay of the
webcast will be archived and made available on Nov. 3, 2015.
For more information, visit www.zoetis.com and
www.PHARMAQ.no.
About Zoetis
Zoetis (zô-EH-tis) is the leading animal health company,
dedicated to supporting its customers and their businesses.
Building on more than 60 years of experience in animal health,
Zoetis discovers, develops, manufactures and markets veterinary
vaccines and medicines, complemented by diagnostic products and
genetic tests and supported by a range of services. In 2014, the
company generated annual revenue of $4.8 billion. With
approximately 10,000 employees worldwide at the beginning of 2015,
Zoetis serves veterinarians, livestock producers and people who
raise and care for farm and companion animals with sales of
its products in 120 countries. For more information, visit
www.zoetis.com.
About PHARMAQ
PHARMAQ is the world's leading pharmaceutical company supplying
the aquaculture industry. The company provides environmentally
sound, safe and efficacious health products to the global
aquaculture industry through targeted research and the commitment
of dedicated people. The vaccines are manufactured in a state of
the art production facility in Overhalla and Oslo, Norway.
Administration and research and development activities are based in
Oslo with subsidiaries in Norway, Chile, United Kingdom, Vietnam,
Turkey, Spain, Panama and Hong Kong. PHARMAQ has approximately 200
employees. The company's products are marketed in Europe, North and
South America, and Asia. PHARMAQ's majority shareholder is the
private equity investment firm Permira Funds. Management and
employees hold a significant stake in the company. For further
information, please visit our website: www.PHARMAQ.no.
DISCLOSURE NOTICES
Forward-Looking Statements: This
press release contains forward-looking statements, which reflect
the current views of Zoetis with respect to business plans or
prospects, future operating or financial performance, expectations
regarding products, future use of cash and dividend payments, and
other future events. These statements are not guarantees of future
performance or actions. Forward-looking statements are subject to
risks and uncertainties. If one or more of these risks or
uncertainties materialize, or if management's underlying
assumptions prove to be incorrect, actual results may differ
materially from those contemplated by a forward-looking statement.
Forward-looking statements speak only as of the date on which they
are made. Zoetis expressly disclaims any obligation to update or
revise any forward-looking statement, whether as a result of new
information, future events or otherwise. A further list and
description of risks, uncertainties and other matters can be found
in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2014, including in the sections thereof captioned
“Forward-Looking Information and Factors That May Affect Future
Results” and “Item 1A. Risk Factors,” in our Quarterly Reports on
Form 10-Q and in our Current Reports on Form 8-K. These filings and
subsequent filings are available online at www.sec.gov,
www.zoetis.com, or on request from Zoetis.
1 Based on Zoetis data on file
2 Vetnosis
3 Food and Agriculture Organization of the United Nations
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151102006867/en/
Zoetis Media:Bill Price,
973-443-2742William.price@zoetis.comorElinore White,
973-443-2835Elinore.y.white@zoetis.comorPHARMAQ Media:Tore Valderhaug, +47 99 56 09
25tore.valderhaug@pharmaq.comorZoetis
Investor:John O'Connor,
973-822-7088john.oconnor@zoetis.comorSteve Frank,
973-822-7141steve.frank@zoetis.com
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