European private equity firm Cinven has agreed to sell AMCo, a niche specialty pharmaceuticals group to TSX/Nasdaq-listed Concordia Healthcare Corp for an enterprise value of GBP2.3 billion.
The deal will comsist of a combination of cash, common shares of Concordia, and a maximum performance-based earnout of approximately GBP145 million over the next 12 months.
Cinven created AMCo, which focuses on the sale of niche prescription off-patent products, in 2012 through the transformative merger of Mercury Pharma (‘Mercury’) and Amdipharm, both of which were acquired in bilateral transactions, in August and October 2012 respectively.
Cinven’s Healthcare team identified the opportunity to consolidate the niche pharmaceutical market more than two years prior to this, developing a unique strategy from the outset to merge these two attractive and complementary targets. Cinven’s combination of Amdipharm with Mercury (with 70% international sales and 80% UK sales, respectively, at the time of acquisition) created a truly global leader.
Since 2012, Cinven and AMCo’s management team, led by John Beighton, have executed a successful ‘buy and build’ strategy, including five value-accretive acquisitions which, when combined with strong underlying organic growth, has doubled the EBITDA of the Group. For 2015, AMCo expects to record pro forma revenues of GBP345million to GBP365 million.
Supraj Rajagopalan (pictured), Partner at Cinven, says: “Cinven successfully created AMCo – through the combination of two businesses – as a result of bilateral transactions and our strong healthcare sector focus and track record. We saw an opportunity to create significant value through the consolidation of the relatively fragmented, off-patent, niche pharmaceuticals market and AMCo has certainly achieved that.
“We have worked closely with the highly capable management at AMCo, led by John Beighton, in further strengthening the senior team, internationalising the business, executing and integrating several acquisitions as part of our ‘buy and build’ strategy, and optimising AMCo’s capital structure in order to most effectively achieve growth. This acquisition by Concordia is a natural next step that will position the combined business perfectly for further growth within the pharma sector. We look forward to generating further upside through our shareholding in Concordia and we wish the AMCo team every success in the future.”
