2 July 2018 - Deborah Wilkes
A consortium led by private-equity firm CVC Capital Partners is acquiring a majority stake in Italian pharmaceutical company Recordati for EUR3.03 billion (USD3.50 billion).
The deal was announced just days after the Recordati family confirmed that talks had been held with CVC about a sale of the family holding company Fimei, which owns a 51.8% stake in Recordati (click here to read the News story).
Andrea Recordati will remain chief executive officer of Recordati, and is reinvesting alongside the consortium.
Fritz Squindo will continue as Recordati's managing director and chief financial officer.
Commenting on the deal, Andrea Recordati said: "In the process of finding the best partner to take Recordati forward, it was important to find a party that would allow Recordati to remain independent – with continuity for management and employees – and accelerate its growth strategy as a leading global consolidator in the pharmaceutical industry."
Cathrin Petty, head of EMEA healthcare at CVC, pointed out that Recordati had built up a "very attractive rare disease business" over the past decade.
Petty said CVC's "expertise and global healthcare network" would help accelerate Recordati's "growth across orphan and specialty care to build a global leader in the industry".
The consortium has agreed to acquire Fimei for around EUR2.3 billion in cash plus EUR750 million in subordinated long-term debt securities. CVC said the deal valued Recordati at EUR5.86 billion, representing EUR28.00 per share.
The 100% equity value of EUR5.86 billion represents 4.5-times Recordati's 2017 sales of EUR1.29 billion. Recordati's operating income in 2017 was EUR407 million, and its net income was EUR289 million.
The transaction, which is expected to close in the fourth quarter of 2018, is subject to mandatory competition approvals.
Following completion, the investors will be required by Italian law to launch a mandatory tender offer to all minority shareholders.
CVC said Recordati was expected to remain a publicly-listed company.
In addition to CVC, which manages assets worth more than USD70 billion, the consortium includes PSP Investments and StepStone.
First-quarter results released
Worldwide sales at Recordati were EUR367 million in the first quarter of 2018, representing a rise of 7.2% compared to the same period a year earlier. Around a fifth of Recordati's sales were generated in its home market of Italy.
The OTC business accounted for 16.4% of worldwide sales.
In June 2018, Recordati announced that it had acquired Italian vitamins, minerals and supplements (VMS) specialist Natural Point for an undisclosed sum (click here to read the News story).
A few months earlier, Recordati boosted its presence in the French gastroenterology market by acquiring three brands – Colopeg, Transipeg and TransipegLib – from Bayer Consumer Health (click here to read the News story).
Recordati's operating income grew by 12.4% to EUR121 million in the first quarter of 2018, representing 32.9% of sales.
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) were up by 14.2% to EUR134 million, representing 36.7% of sales.
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