Recipharm to Acquire Corvette Pharmaceutical Services To Expand Lyophilization Capacity
To expand lyophilization capacity and improve access to markets in Italy and emerging markets, Recipharm AB, a contract development and manufacturing organization based in Jordbro, Sweden, has agreed to acquire Milan-based Corvette Pharmaceutical Services Group from the Italian private equity Group LBO Italia Investimenti s.r.l. for EUR 120 million ($160 million).
The transaction values Corvette at an enterprise value EUR 120 million ($160 million) with estimated net debt of EUR 20 million ($27 million). The estimated equity consideration of EUR 100 million ($133 million) will be paid for by 50% cash and 50% in the form of a senior unsecured convertible bond to the sellers. The sellers also will be entitled to 15% of any potential Erdosteine net royalties yielded from its US orphan drug indication for a period of ten years from closing. Erdosteine is a mucoactive drug for treating acute respiratory disease and chronic obstructive pulmonary disorder and is approved in approximately 40 countries. In April 2014, Erdosteine received orphan drug status for treating bronchiectasis by the US Food and Drug Administration. Erdosteine was developed by Edmond Pharma, which is part of Corvette Pharmaceutical Services Group. The deal is expected to close on October 1, 2014 following Recipharm's Extraordinary General Meeting, scheduled for September 14, 2014, to authorize its board of directors to issue the convertible bond.
Corvette had 2013 revenue of EUR 57.7 million ($76.8 million). Forty percent of its sales are to Italy, and 20% of its sales are to emerging markets. Based on 2013 proforma financials, the revenue of a combined Corvette and Recipharm would be SEK 2.6 billion ($378 million). Corvette has three manufacturing facilities located in the Milan region of Northern Italy. Each facility specializes in a different technology and business area. In Masate, the company has a sterile injectable manufacturing facility with capabilities for both lyophilization and liquid filling of vials and ampuls, including hormones supplied to numerous territories, including Japan. At Paderno Dugnano, the company has an active pharmaceutical ingredient and finished dose form development and manufacturing facility with a number of owned product rights, including Erdosteine, a mucolytic product. The facility supplies the global market, including the US and Japan. The company’s facility in Lainate provides bulk lyophilization of sterile beta-lactam antibiotics supplied to numerous markets, including Japan. Approximately 265 people are employed across the three facilities. Recipharm has manufacturing assets in Sweden, France, the UK, Germany, and Spain. The deal addresses current and short-term capacity shortages for Recipharm as it waists for new capacity to come on stream in its existing facility. The deal also provides Recipharm with the capability of handling hormones in both vials and ampules.
Source: Recipharm