TIDMHIK
RNS Number : 4590P
Hikma Pharmaceuticals Plc
03 October 2011
PRESS RELEASE
Hikma enters the Moroccan market through the acquisition of
63.9% of Promopharm and will launch a mandatory tender offer for
the remaining 36.1%
London, 3 October 2011 - Hikma Pharmaceuticals PLC (LSE: HIK)
(NASDAQ Dubai: HIK) ("Hikma"), the fast growing multinational
pharmaceutical group, today announces that it has acquired 63.9% of
Societe de Promotion Pharmaceutique du Maghreb S.A. (Casablanca:
PRO) ("Promopharm" or the "Company") from a consortium of
shareholders, comprising existing management, institutions and
related parties, for an aggregate cash consideration of $111.2
million (MAD 912.8 million) and will launch a mandatory tender
offer for the remaining 36.1% of the Company.
Transaction highlights
-- Acquisition of Promopharm, the ninth largest manufacturer of
pharmaceuticals in Morocco with a 3.5% market share
-- Delivers a substantial local manufacturing presence in
Morocco, the fourth largest pharmaceutical market in MENA, and
completes Hikma's footprint in the region
-- Brings more than $45 million in annual revenue and offers
significant growth potential within Morocco from its portfolio of
high quality branded generics and in-licensed products
-- Provides an excellent distribution platform for launching
Hikma's leading strategic products in the Moroccan market
-- Creates opportunities to export Promopharm's product
portfolio to Hikma's existing markets, leveraging Hikma's extensive
sales and marketing operations across MENA, and to develop Hikma's
presence in West African markets
-- Expected to be earnings accretive in the first full year
Strategic rationale
Promopharm is the ninth largest manufacturer of pharmaceutical
products in Morocco, with around 3.5% market share. Promopharm
specialises in the production, marketing and sales of prescription
pharmaceuticals, para-pharmaceuticals, dermo-pharmaceuticals and
cosmetics. The Company has a long history in Morocco and a
well-established reputation as one of the leading local
manufacturers.
In 2010, the Moroccan market for pharmaceutical products reached
$1.7 billion in retail value terms and is expected to grow at a
CAGR of around 9% between 2010 and 2014. With a population of 32
million people, the Moroccan market offers excellent growth
opportunities. The Moroccan government is committed to expanding
healthcare coverage and is also increasingly focused on supporting
local manufacturing and promoting higher usage of generic
pharmaceuticals in Morocco.
Promopharm's high quality product portfolio offers significant
potential to grow sales in the Moroccan market. Promopharm has a
portfolio of around 200 branded generic and in-licensed products in
multiple dosage strengths and forms, across a broad range of
therapeutic areas, including alimentary tract and metabolism,
musculoskeletal, respiratory, hormones, anti-infectives, central
nervous system ("CNS"), cardiovascular and dermatology.
There are substantial opportunities for Hikma to supplement
Promopharm's product portfolio in key therapeutic areas and Hikma
has already identified over 20 strategic anti-infective, CNS,
cardiovascular and diabetes products for distribution in the
Moroccan market. Over the longer term, Hikma also sees the
potential to bring its innovative injectable and oncology products
to Morocco. Hikma will utilise Promopharm's strong commercial and
distribution platform, leveraging its excellent relationships with
pharmacies, wholesalers, distributors and licensors. Promopharm's
high calibre workforce of over 300 employees, including a sales and
marketing team of around 135, will be extremely complementary to
Hikma's existing operations across MENA.
The acquisition brings excellent opportunities to export
Promopharm's key branded generics into other MENA markets. Hikma
will explore the potential to expand Promopharm's existing
in-license arrangements to other MENA markets where Hikma has a
presence. Hikma will also assess the opportunity to use Promopharm
as a hub for expansion into West Africa.
Promopharm has a good quality medium-sized production facility
with strong capabilities in general formulation, including tablets,
capsules, liquids, creams, ointments and injectables. It has a
dedicated anti-infectives facility for oral penicillin. Promopharm
also brings new manufacturing capabilities to Hikma, including
eye-drops and effervescents. The facility offers the potential to
increase current utilisation and capacity levels with limited
incremental capital expenditure and future growth in the combined
business is expected to enable cost and efficiency savings.
Promopharm's CEO and Chairman will remain in their current
positions following the transaction. They bring with them
considerable experience in the Moroccan market and the Chairman, as
the former head of the Pharmaceutical Association of North Africa,
also brings additional expertise. Their continued involvement will
facilitate integration and they will be joined by an experienced
Hikma team to support them in the key functions of operations,
finance, and sales and marketing.
Promopharm generated revenue of $44.7 million (MAD 376 million)
and EBITDA of $13.2 million (MAD 111 million) in 2010. The business
has been performing well in 2011 and is expected to deliver
double-digit revenue and EBITDA growth for the full year. Hikma
will consolidate Promopharm for the three months ending December
2011 and expects to incur transaction costs of approximately $6
million this year. The acquisition is expected to be earnings
accretive in 2012.
The book value of the gross assets subject to the transaction,
prior to the performance of the fair value exercise and excluding
acquired intangible assets, was $70.3 million (MAD 550 million) as
of 30 June 2011. Promopharm had a net cash position of $16.4
million (MAD 129 million)(6) at 30 June 2011. The acquisition will
be funded by new committed debt facilities in the form of a 7-year
syndicated loan. Following the transaction, Hikma's leverage ratios
remain comfortable and it expects to be able to de-lever
quickly.
Hikma's acquisition of 63.9% of Promopharm has been approved by
the Moroccan Ethical Council of Securities (Conseil Deontologique
des Valeurs Mobilieres ("CDVM")). Hikma will launch a mandatory
tender offer for the remaining 36.1% of the Company, which is
listed on the Casablanca Stock Exchange. Hikma will file a
prospectus with the CDVM and following approval of this document,
the mandatory tender offer will be launched. Hikma expects to
complete the tender offer by the end of the year.
Commenting on the transaction, Said Darwazah, CEO of Hikma said,
"Entering the Moroccan market has been a strategic priority for
Hikma for some time and we are delighted to have acquired a company
that offers such an excellent fit with our long term growth
objectives. Establishing ourselves as a local manufacturer in
Morocco completes our MENA footprint and strengthens our leading
position in the region. Promopharm's impressive product portfolio
and its high quality manufacturing capabilities bring exciting
growth opportunities for our combined business, both in Morocco and
across our other markets in MENA. The acquisition offers excellent
potential to drive value creation. Promopharm has a strong
management team and experienced operational and sales teams and we
look forward to working with them. We will continue to pursue
further value enhancing opportunities across our operations."
A conference call for analysts and investors will be held on
Tuesday 4 October 2011 at 09:00 BST on London Local: +44 208 817
9301; UK Freephone: +44 800 634 5205; or US Freephone: +1 866 629
2704. A live webcast of the conference call will be available at
www.hikma.com. A recording of the call will be available on the
Hikma website.
Centerview Partners acted as lead financial advisor to Hikma.
Citi also provided financial advice on the transaction. Citi and
Arab Bank jointly led the arrangement of the financing.
----- ENDS -----
Enquiries
Hikma Pharmaceuticals PLC
Susan Ringdal, Investor Relations Director +44 (0)20 7399
2760/07776 477 050
FTI Consulting +44 (0)20 7831 3113
Ben Atwell /Julia Phillips/Jonathan Birt/Matthew Cole
About Hikma
Hikma Pharmaceuticals PLC is a fast growing multinational
pharmaceutical group focused on developing, manufacturing and
marketing a broad range of both branded and non-branded generic and
in-licensed products. Hikma's operations are conducted through
three businesses: "Branded", "Injectables" and "Generics" based
principally in the Middle East and North Africa ("MENA") region,
where it is a market leader, the United States and Europe. In 2010,
Hikma achieved revenues of $731 million and profit attributable to
shareholders of $99 million. For news and other information, please
visit www.hikma.com.
Forward looking statements
Certain statements in this announcement are forward-looking
statements - using words such as "intends", "believes",
anticipates" and "expects". Where included, these have been made by
the Directors in good faith based on the information available to
them up to the time of their approval of this announcement. By
their nature, forward-looking statements are based on assumptions
and involve inherent risks and uncertainties that could cause
actual results or events to differ materially from those expressed
or implied by the forward-looking statements, and should be treated
with caution. These risks, uncertainties or assumptions could
adversely affect the outcome and financial effects of the plans and
events described in this announcement. Forward-looking statements
contained in this announcement regarding past trends or activities
should not be taken as a representation that such trends or
activities will continue in the future. You should not place undue
reliance on forward-looking statements, which speak as only of the
date of the approval of this announcement.
Except as required by law, the Company is under no obligation to
update or keep current the forward-looking statements contained in
this announcement or to correct any inaccuracies which may become
apparent in such forward-looking statements.
This information is provided by RNS
The company news service from the London Stock Exchange
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