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Aspen's share price swells 6% on deal with Merck

by , 28 June 2013

Yesterday, in its quest to access new markets, Aspen Pharmacare Holdings announced that its $1 billion offer to acquire Merck's manufacturing plant for active pharmaceutical ingredients (API) in Holland was accepted. The news led to the company's share price adding 6%...

Aspen is the ninth largest provider of generic medicines in the world and Africa’s largest.

The company has “been on an aggressive drive to build out its portfolio of drugs,” reports IOL. This follows last week’s announcement where Aspen “said it would acquire brands of thrombosis medicine from GlaxoSmithKline, in another deal likely to be worth about $1 billion”.

The market reacted very positively to the news of the acquisition of the Dutch manufacturing plant, rewarding Aspen’s share price 6.13%.

The shares are “up nearly 70% over the last 12 months and six-fold since 2008,” reports MoneyWeb.

In addition to the acquisition of the Dutch manufacturing business, Aspen “would buy a portfolio of 11 drugs - including hormone replacement therapy, oral contraceptives and an anti-coagulant - from Merck,” adds MoneyWeb.

Aspen’s R10 billion deal will drive R6 billion in annual sales

The $1 billion “deal brings Aspen more than R6 billion in annual sales, including $260 million from the products unit and €280 million from the pharmaceutical company,” states Bloomberg.

But, the deal isn’t done and dusted just yet.

It’s subject “to approval from regulatory authorities, including the Reserve Bank,” reports BDLive. If the nod is given, “Aspen expects to take ownership” of Merck’s API business at the start of October.

On a cautionary note, the pharmaceutical giant is funding the deal with debt. But “Aspen's track record of cash generation and its ability to pay back its debt puts the company on a solid footing,” said analyst Sibonginkosi Nyanga of Imara SP Reid, adds MoneyWeb.

Clearly exciting times lie ahead for this defensive counter.

Aspen's share price swells 6% on deal with Merck
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