Albany Molecular Research Inc (Amri), a Nasdaq-listed pharma and biotech products contractor, announced it will buy 100% of Italy’s Euticals (or Prime European Therapeuticals spa), a global leader of active pharma principles for a 358 million dollars price (or 315 million euros). Private equtiy funds, who are actually Euticals’ major shareholders, will reinvest in Amri (see here the press release).
Sellers are Lauro Cinquantasette spa (which is controlled by private equity funds Clessidra Capital Partners II, Mandarin Capital Partners sca Sicar, Private Equity Partners sgr and Idea Capital Funds sgr) owning an 86% stake in Euticals capital, and Poli, Carinelli and Puricelli families and Eutical’s management.
Amri expects to finance the transaction through the issuance of approximately 7 million shares of Amri common stock (currently valued at 110 million dollars, equal to approximately 19.75% of Amri common stock); a seller note of 63 million dollars; and the remainder in cash. The 7 million shares of Amri common stock to be issued in connection with the transaction will be offered and sold to Lauro Cinquantasette.
Headquartered in Lodi, close to Milan, Euticals specializes in custom synthesis and the manufacture of active pharmaceutical ingredients. It operates a network of facilities primarily in Italy, Germany, US. and France. In 2015 Euticals reached 245 million dollars in revenues and 27 millions in ebitda. On a stand-alone basis, Euticals’ full year 2016 revenue is forecast to be between 245 and 255 million dollar, with adjusted eBITDA of 34-38 millions, implying a purchase price multiple, prior to anticipated synergies, of approximately 9.9x 2016 adjusted ebitda at the midpoint of the range and excluding deal related costs or purchase accounting impacts.
The private equity funds had invested in Euticals in 2012 when the group had been valued 299.6 million euros, including debt, after Euticals had reached 214 million euros in revenues in 2011 and 38.5 millions in ebitda (see Private equity monitor). So Euticals figures had remained close to the ones reached back then which means that private equity funds are almost flat on the deal now. However perspectives are good as the transaction is expected to be accretive to AMRI’s 2016 non-GAAP diluted earnings per share. Amri expects to generate operational synergies of 13-15 millions over the next three years. On a pro forma basis including synergies, AMRI’s full year 2017 revenue is forecast to exceed 750 million dollars, with adjusted ebitda margins of approximately 20%.
Fernando Napolitano will be joining Amri’s Board of Directors on behalf of Lauro Cinquantesette. Nomura, who helped the funds to identified the righ acquiror for Euticals, supported Amri as financial advisor, while Goodwin Procter and LCA Studio Legale acted as legal advisors. Lincoln International infine acted as Lauro Cinquantasette’s financial advisor while Chiomenti and Debevoise & Plimpton law firms were the legal advisors.
