Aspen and GSK Agree On Series Of Strategic Transactions
Aspen, Africa's largest pharmaceutical manufacturer, has announced that it has agreed to multiple, strategic, inter-dependent transactions with a leading multinational pharmaceutical group, GlaxoSmithKline.
Johannesburg - JSE listed Aspen (Apn), Africa’s largest pharmaceutical manufacturer, has announced that it has agreed to multiple, strategic, inter-dependent transactions (hereafter referred to as "the Transactions") with a leading multinational pharmaceutical group, GlaxoSmithKline ("GSK"). The value of the Transactions will be determined by Aspen’s share price at the date upon which the Transactions are completed Based on Aspen’s closing share price on 11 May 2009 the Transactions would be valued at R3.47 billion, (USD 411.5 million, GBP 272.6 million).
The Transactions comprise:
The acquisition of the rights to distribute GSK products in South Africa by Aspen’s wholly owned subsidiary, Pharmacare Limited ("the SA Component");
The formation of a collaboration arrangement in relation to the marketing and selling of prescription pharmaceutical products in sub-Saharan Africa ("SSA"), (excluding South Africa, Lesotho and Swaziland) between Aspen and GSK, to be known as "GSK Aspen Healthcare for Africa" ("the SSA Collaboration");
The acquisition by a newly formed wholly-owned subsidiary of Aspen of GSK’s manufacturing facility in Bad Oldesloe, Germany as a going concern ("the Facility"); and
The acquisition by Aspen’s wholly owned subsidiary, Aspen Global, of eight specialist products for worldwide distribution ("the Products").
Stephen Saad, Aspen Group Chief Executive said: "The Transactions further strategically complement Aspen and GSK’s strong and mutually beneficial relationship which has been fostered over several years. The Transactions will reinforce Aspen’s position as a leading provider of quality, affordable medicines across Africa. The acquisition of additional products for distribution into worldwide markets supports Aspen’s recently implemented internationalisation strategy into emerging markets and the establishment of a global distribution network. "
As consideration for the Transactions, Aspen will issue 68.5 million ordinary shares to GSK (approximately 16% of Aspen’s issued ordinary share capital after the issue thereof). On completion of the Transactions GSK will attain the right to nominate one member to the Aspen Board. The final value of the Transactions and the attribution of this value to the individual transactions will depend on the price at which Aspen shares are trading on the JSE upon completion of the Transactions.
Details of the Transactions:
a) The SA Component: Aspen will acquire the rights to sell, market and distribute GSK’s products in SA for a minimum period of twenty years. GSK will maintain a presence in South Africa through its retained Consumer Healthcare business and the GSK scientific office.
b) The SSA Collaboration: GSK and Aspen will enter into a collaboration arrangement for the commercialisation of a portfolio of branded prescription pharmaceutical products in SSA.. The portfolio of products will include a combination of GSK and Aspen products. GSK’s existing distribution platform in SSA will be used for this purpose. Aspen’s subsidiary in East Africa, Shelys, is presently excluded form the ambit of this collaboration arrangement.
GSK is one of the leading pharmaceutical companies in SSA, covering most territories in this region with its diverse and recognised portfolio of branded products. Aspen’s extensive product portfolio will supplement GSK’s existing position in the region. The benefits of a combined portfolio of products, supported by a strong distribution network will enable Aspen and GSK to increase access to high-quality, affordable healthcare throughout SSA under the collaboration brand of "GSK Aspen Healthcare for Africa".
c) Acquisition of manufacturing facility in Bad Oldesloe, Germany: Aspen will acquire the business comprising GSK’s manufacturing facility in Bad Oldesloe, Germany as a going concern. The Facility currently manufactures a range of products, including some of the products which Aspen is to acquire from GSK through the Transactions as well as products acquired from GSK through previous transactions. A ten-year supply arrangement with GSK for the continued supply of GSK retained products currently manufactured at the Facility has also been agreed to.
The acquisition of the Facility will enhance Aspen’s existing manufacturing base and enable the Group to optimise production capacities to meet demand from its global markets. The technical skills and competence of staff at the Facility will further complement Aspen’s existing manufacturing capability.
The acquisition of eight specialist products: Aspen Global will acquire eight specialist products from GSK for distribution into worldwide markets, except for Alkeran in the USA which will be retained by GSK. The products are:
Alkeran, Leukeran and Purinethol – chemotherapy products which are used in the treatment of cancer;
Kemadrin – used to treat and relieve the symptoms of Parkinson’s disease;
Lanvis and Myleran – used for the treatment of leukemia;
Septrin – a broad-spectrum anti-microbial; and
Trandate – used for the treatment of high blood pressure.
These products will add to Aspen’s existing global brands portfolio which contains products such as Eltroxin, Lanoxin, Imuran and Zyloric, acquired from GSK in June 2008, as well as Aldomet, Indocid and Aggrastat which are being dristributed under license from Iroko.
The completion of the Transactions is subject to the fulfillment of, inter alia, the following conditions precedent:
The approval of the Exchange Control Department of the South African Reserve Bank;
The consent to the Transactions from Aspen Global’s existing long-term funders;
The approval of the relevant competition authorities in relation to the SSA Collaboration;
The approval of the SA competition authority in relation to the SA Component;
The approval of the relevant competition authorities in relation to the acquisition of Aspen Global for the Products;
Approval from the German competition authorities and various other German regulators for the purchase of the Facility; and
JSE approval for the listing of the consideration shares.
The terms of the agreement are expected to be completed before the end of 2009.