CVC Capital Partners, through the CVC Strategic Opportunities II fund, has signed the agreement for the acquisition of the majority of the Genetic Group, a leading Italian company in the pharmaceutical sector, specialized in the development and supply of products in the respiratory, ophthalmic and therapeutic areas. oncology (see the press release here).
CVC had entered into an exclusive negotiation with the Pavese family last June, up to now controlling the company through Oxford Pharma Holding srl (see here a previous article by BeBeez). The family had sent a mandate to advisor Ubs last fall to assist her in the search for a new investor in the company’s capital (see here a previous article by BeBeez). The transaction is subject to customary regulatory approvals. Genetic was supported by UBS, EY, LED Taxand and NCTM, while CVC Strategic Opportunities by Rothschild & Co, EY Parthenon, EY, BCG, Gattai Minoli Agostinelli & Partners and Facchini Rossi Michelutti.
Headquartered in Fisciano, Campania, Genetic is an integrated pharmaceutical company specializing in the research, development, production, registration and promotion of medicines and specialist medical devices. His main expertise is in the development of respiratory and ophthalmic products administered through single-dose formats based on Blow-Fill-Seal technology, pre-dosed sprays (pressurized metered dose inhalers, pMDIs), nasal sprays, and eye drops. Genetic’s products are marketed through a network of leading international partner pharmaceutical companies and their own distributor (Max Farma) in Italy, often with well-known local brands. The company’s sales are concentrated in Italy and in more than 20 countries around the world, with over 50 products marketed.
The group ended 2018 with 42 million euros in revenues, an ebitda of 12.8 million and net liquidity of 9.3 million (source Leanus). The average market multiples in Italy for the pharmaceutical sector were around 9.8x the ebitda last year, as in 2018, so Genetic could have been valued at around 125 million euros.
The Genetic dossier was also being studied by leading Italian and foreign industrial operators in the sector, as well as other private equity funds, including the names of KKR and the Spanish ProA Capital. Last September, the funds concerned were said to be evaluating the simultaneous purchase of Genetic and another similar pharma company, for a deal that at that point would have been valued at 200 million. Then it had come to talk about 300 million.
The equity investment in Genetic joins the CVC Strategic Opportunities II portfolio owning the 50% stake in the German DFE Pharma, acquired by CVC in September 2019 (see the press release here). DFE Pharma was a joint venture between the dairy groups Fonterra and FrieslandCampina, specialized in the production of lactose as a pharmaceutical grade excipient, used in the production of capsules and tablets. CVC acquired the share of Fonterra and on that occasion the ceo of DFE Pharma, Bas van Driel, said: “The combination of FrieslandCampina and CVC as shareholders will provide us with new opportunities to excel. The CVC international network, the experience and the track record in the pharmaceutical sector, as well as its support capabilities, will be essential to expand our business and explore potential m&a opportunities”. The closing of the deal was then signed last January. New Zealander Fonterra grossed 633 million New Zealand dollars for its stake, to which an earn-out of 44 million can be added, linked to the group’s performance over the following two years. Fonterra has granted DFE a 96 million dollar 15-year vendor loan.
Michael Lavrysen, senior managing director of CVC Strategic Opportunities, added: “The Stategic Opportunities platform invests in high quality companies with long-term growth horizons, and the investment in Genetic fits perfectly into this strategy, in particular with the partnership with the Pavese family. We look forward to fostering the collaboration between Genetic and DFE Pharma, a company currently in our portfolio, and to leverage the wider global CVC network. ”
Giorgio De Palma, senior managing director of CVC Italia, said: “We believe that Genetic has a position of excellence in the respiratory and ophthalmology pharmaceutical markets and strong growth opportunities in Italy and abroad. We look forward to work with the Pavese family to realize our shared vision of the future ” .
Rocco Pavese, founder and ceo of the company, who will continue to lead the research and development activities, and Francesca Pavese, head of the business development function, said: “We are excited and proud to partner with CVC and look forward to working with them on a new chapter of organic and inorganic growth in our business, which will project the Genetic group into a new international dimension of technological innovation and value creation. benefit of patients from all over the world, while guaranteeing the safeguarding and development of employment in our country. We believe that the international network, CVC experience and track record in Italy and in the healthcare sector, as well as positioning of the Stategic Opportunities fund as a partner of families like ours, will help us fulfill our aspirations for growth. ”
CVC already has important experience in the pharmaceutical sector in Italy. In fact, it owns 51.8% of Recordati (see here a previous article by BeBeez) and previously invested in DOC Generici, then sold to ICG and Merieux Equity Partners (see here a previous article by BeBeez).
To date, the BeBeez Private Data database includes 101 Italian companies in the pharmaceutical and medical sector in the portfolio of private equity and venture capital investors. In particular, the largest investee pharmaceutical companies are Recordati (CVC), Alfasigma (NB Renaissance), Kedrion (FSI e Cdp Equity-KIA), Esaote (YF YunFeng) Capital), DOC Generici (ICG e Merieux Equity Partners).