LONDON, October 3, 2011 /PRNewswire/ --
Hikma Pharmaceuticals PLC (LSE: HIK) (NASDAQ Dubai: HIK)
("Hikma"), the fast growing multinational pharmaceutical group,
today announces that it has acquired 63.9% of Société 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[1] 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%[2] 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.[3] With a population of 32
million[4] 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[5]. 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)[6] 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 Déontologique
des Valeurs Mobilières ("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(0)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 http://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.
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
http://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.
1. IMS Morocco, MAT June 2011
2. IMS Morocco, MAT June 2011
3. Pharma Outlook© Espicom Business Intelligence, Quarter II
2009
4. CIA World Factbook, July 2011
estimate
5. 2010 average FX rate of 0.1188, Source: Bloomberg
6. 30 June 2011 spot rate of
0.1277
Enquiries
Hikma Pharmaceuticals PLC
Susan Ringdal, Investor Relations
Director +44(0)20-7399-2760 /
+44(0)7776-477-050
FTI
Consulting +44(0)20-7831-3113
Ben Atwell /Julia Phillips/Jonathan
Birt/Matthew Cole
SOURCE Hikma Pharmaceuticals PLC