Aurobindo Pharma to buy Actavis’ operations in western Europe for around $40M

Hyderabad-based drugmaker Aurobindo Pharma Ltd has signed a binding offer to acquire loss-making commercial operations of Dublin-headquartered Actavis Plc in seven European countries for €30 million ($40.6 million or Rs 221 crore).

According to the company, through this acquisition Aurobindo will strengthen its western European portfolio and will bring on board personnel, commercial infrastructure, products, marketing authorisations and dossier licences from the particular operations.

Further, this acquisition expands Aurobindo’s front-end operations into five segments (generics, prescription products, over-the-counter products, hospital products and generics tenders) with approximately 1,200 products and an additional pipeline of over 200 products.

“We have carefully reviewed the Actavis European operations and concluded that with our cost competitiveness and group structure, we could significantly capitalise Actavis’ strong market position in these Western European countries and improve profitability, thereby accelerating our strategy of becoming a significant Gx player in Europe,” said  Arvind Vasudeva, CEO of Aurobindo’s Formulations Business.

The acquired assets will complement existing Aurobindo European operations adding capabilities in France, Italy, Spain, Portugal, Germany, Netherlands and Belgium besides bringing brands such as ‘Arrow Generiques’.

It would also provide a readymade hospital sales infrastructure for Aurobindo to launch its own injectable and speciality portfolio across western Europe.

Total consideration is expected to be around €30 million and will depend upon the cash and net working capital position at closing. Aurobindo plans to fund the acquisition through internal accruals.

According to the release, post-acquisition Aurobindo and Actavis will enter into a long-term commercial and supply arrangement to support the ongoing growth plans of these businesses.

The management of the company estimates net sales of the acquired business to be around €320 in 2013 with a growth rate of over 10 per cent year on year. At present these businesses are loss making.

“We believe that the value created by the commercial operations in these seven markets will be better maximised by Aurobindo, which will gain scale, additional products and enhanced competitive market share position as a result of this transaction. This transaction will permit Actavis to focus management time and resources to support accelerated investment in driving faster growth of other markets, including Central and Eastern Europe and Southeast Asia,” said Sigurdur Oli Olafsson, President of Actavis Pharma.

Aurobindo was advised by Jefferies International Ltd and Herbert Smith Freehills LLP while Actavis was advised by Rothschild and Latham & Watkins for the deal.

Mid- and large-size Indian pharma companies have been acquiring assets both within the country and overseas. Some of these include Torrent acquiring Elder Pharma’s domestic formulation business Rs 2,004 crore, Ipca acquiring 50 per cent of Avik Pharma and Cipla acquiring South Africa-based Cipla Medpro for $512 million.

(Edited by Joby Puthuparampil Johnson)

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