JOHANNESBURG - South African drug maker Aspen Pharmacare continued with its strategy of exiting non-core assets after Mylan exercised its option to buy its portfolio for a maximum consideration of A$188million (R1.86billion).
The group said it would use the proceeds to reduce its debt.
“This divestment is in line with the group’s ongoing portfolio management approach and its stated intention to not only acquire value enhancing products, but to also divest of non-core assets, thereby ensuring enhanced operational focus,” the group said.
The assets sales come as Aspen fell nearly 30percent in March on low earnings growth during the six-month period to end December.
Its stock has more than halved on concerns that its debt had worsened beyond previous estimates.
The sales come after Aspen was given the go-ahead by the New Zealand authorities on Friday to sell its nutritionals business for around R10bn.
The group is selling the infant formula business to French dairy giant Lactalis in an effort to reduce debt.
It had been planning to divest from Aspen Australia since December.
The group announced that its wholly-owned subsidiary incorporated in Mauritius, Aspen Global Incorporated (AGI) and its Australian subsidiaries (Aspen Australia) had entered into a distribution arrangement with Alphapharm, a subsidiary of Mylan in respect of the portfolio commercialised in Australia and New Zealand, with effect from December 1.
It also announced that this distribution arrangement included an option for Mylan to acquire this portfolio from AGI and from Aspen Australia.
The group confirmed yesterday that Mylan had exercised the option.
“Aspen is pleased to confirm that Mylan has exercised this option and will acquire this portfolio of products from AGI and Aspen Australia for a maximum consideration of A$188m, of which A$93m is payable by May 29, A$30m is payable in January 2020 and up to A$65m is payable in September 2020,” Aspen said.
The group said the value of the final payment was partially contingent on Aspen satisfying certain conditions.
However, the group did not mention those conditions.
Aspen operates with an established business presence in approximately 50 countries on six continents.
The group said it would retain a strong presence in both emerging and developed countries.
Its emerging market footprint includes sub-Saharan Africa, Latin America, South East Asia, China, Eastern Europe and the Commonwealth of Independent States, comprising Russia and the former Soviet Republics.
Aspen shares rose 0.19 percent higher on the JSE to close at R105.