Ascendis surpasses Adcock in market value – iol.co.zaBy Sandile Mchunu | August 29, 2016
Ascendis Health announced on Friday that it had met all conditions pertaining to the R7.3 billion acquisitions of Cyprus-based pharmaceutical manufacturer Remedica and leading European-based sports nutrition company Scitec. The acquisitions value Ascendis Health at about R11bn, helping it surpass its closest competitor Adcock Ingram, which is worth slightly more than R8.25bn.
Ascendis chief executive Karsten Wellner said the transaction would give the company access to meaningful global platforms, brands and distribution synergies. Wellner said:“Ascendis will also inherit a world class staff compliment of industry leading professionals with knowledge and experience that will benefit the company in the long term and create value for our clients and shareholders.”
Ascendis informed its shareholders in May that it planned to acquire the two companies.
The move received further support when the Public Investment Corporation (PIC) backed the transaction in July. The PIC said as part of the funding of the Ascendis acquisitions, it had funded Kefolile Health Investments, a special purpose vehicle set up to participate in the Ascendis equity capital raise to the value of R500 million. The corporation said it would invest about R1.8bn over four years in Ascendis Health to help the company with the acquisitions.
Remedica is a generic pharmaceutical company that supplies more than 300 products, including oncology drugs, via 2 500 marketing authorisations with a presence in over 100 countries and it is a major supplier of pharmaceuticals to NGOs active in medical relief. Scitec is a leading European sports nutrition company that sells its products in almost 90 countries globally.
The products and distribution networks offered by the three companies complement each other, making it possible for the combined group to offer a broader range of health products to more people who need them. Remedica was acquired for €260m (R4bn) including a deferred payment of €90m after three years.
Scitec was acquired for €170m, including a deferred payment of €20m after one year, with precautions against exchange rate volatility regarding the purchase consideration. Ascendis brands are currently exported to more than 50 countries.
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The company said the fully underwritten rights offer of 54 million shares was snapped up by the Ascendis shareholders, being three times over-subscribed. The vendor placement was also significantly oversubscribed by local and international investors - emphasising the growing faith that the local and international investment community had in the Ascendis business model and its successful track record. Ian Cruickshanks, an independent analyst, said Ascendis Health’s acquisition of the two companies showed confidence on the side of its management.
He said the R7.3bn spent on the acquisition meant that Ascendis management had identified the market as a high growth area.“If I have to choose between Adcock and Ascendis as a stock to invest in the long run, I would pick Ascendis. I would follow where the money is and right now the money is with Ascendis,” he said.
On Friday, Ascendis shares dropped 0.67 percent on the JSE to close at R25.19. Meanwhile, Adcock rose 0.15 percent to close at R46.87. Ascendis chief executive Dr Karsten Wellner says the acquisitions of Remedica and Scitec will give it access to meaningful global brands.
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