Recipharm and Consort Medical agree takeover to integrate CDMO services

The Board of Consort has confirmed its unanimous intention to recommend a cash offer of US$652m for the acquisition

Photo as seen on Consort Medical company video

Recipharm and Consort Medical have reached an agreement on the terms of a Recipharm's cash offer for the UK-based global drug delivery and device company and integrated CDMO. The Board of Consort has confirmed its unanimous intention to recommend a cash offer of £505 million (US$652m).

Recipharm's aim is to become a leading global CDMO, targeting sales of almost $1bn. This target has been set amid consolidation in the fragmented CDMO industry, as pharmaceutical companies seek to reduce their fixed costs by rationalising supply chains and focusing on core R&D and sales capabilities. Consequently, they are turning to trusted partners with the necessary scale and breadth of technologies to support them through the drug development process and the subsequent commercial manufacturing and supply.

The organisations provide different products and services within the same value chain for a number of customers

Given these sector dynamics, and Consort's strength in pharmaceutical device development and manufacturing, Recipharm believes that the combination is an excellent match. Recipharm has been an admirer of Consort's innovative delivery technologies, which are complementary to Recipharm's capabilities in the development and commercial supply of both inhaled and sterile injectable finished dose forms.

The Aesica division provides expansion through additional capabilities and access to new customers. The combination of Consort's product portfolio and services with Recipharm's existing business will allow the enlarged organisation to become a best-in-class technology-based CDMO, positioning it to compete more effectively within a wider part of the value chain.

Deal highlights

  • The combination of Recipharm and Consort is highly complementary given that both organisations provide different products and services within the same value chain for a number of customers
  • The enlarged Recipharm Group is set to become a top five global CDMO, able to offer integrated device development and supply combined with commercial-scale finished dose manufacturing
  • The acquisition will add significant technological IP and know-how to Recipharm's offering, delivering on a key strategy of increasing its share of the value chain
  • It is intended that the acquisition will be implemented by way of a takeover offer under the UK Companies Act, under which the shareholders of Consort will receive GBP 10.10 in cash per share, valuing the entire share capital at GBP 505 million (SEK 6,284 million) on a fully diluted basis
  • The offer is fully financed through bank facilities intended to be partly repaid by proceeds from a proposed share issue following closing
  • The combined entity will enhance Recipharm's scale and profitability with annual pro forma revenue of SEK 10,847 million and pro forma EBITDA of SEK 1,793 million(2)
  • Consort had annual pro forma revenue of GBP 292 million (SEK 3,633 million) and pro forma EBITDA of GBP 47 million (SEK 587 million)(3)
  • Financially compelling and significantly accretive to Cash EPS(4) (immediately accretive in the first fiscal year after completion) with potential for future growth and operating margin expansion

Commenting on the transaction, Thomas Eldered, CEO of Recipharm, said: "In our view, Bespak is already acknowledged as a leading drug device developer and manufacturer and is a perfect fit for Recipharm's broader pharmaceutical capabilities. The enlarged group will be able to provide finished dose forms in Bespak’s key technologies and provide customers with a far more integrated approach. The Aesica business will further expand our capabilities and capacities in both API and finished dose manufacturing whilst providing access to a new customer base.”

Given sector dynamics and Consort's strength in pharmaceutical device development and manufacturing, Recipharm believes that the combination is an excellent match

Commenting on the transaction, Christopher Brinsmead CBE, Chairman of the Board of Consort, said: “Consort’s leading technologies and market positions provide innovative solutions and products to a blue-chip customer base.”

Transaction rationale

  • Scale and capabilities
    • The combination positions Recipharm as a top five global CDMO with >$1bn in sales
    • Ability to better compete for global contracts with pharma companies
  • Inhalation technology leadership
    • Creates a leading end-to-end CDMO with significant technology capabilities
    • Enhanced value proposition in relation to high-value projects for blue-chip customers 
    • Strong know-how and IP portfolio
  • Access to innovation
    • Creates new avenue for growth within the large and rapidly expanding biologics sector
    • VapourSoft technology validated through development contracts
    • Strong pipeline originating from Consort’s Innovation Centre in Cambridge, UK
  • Attractive financial impact
    • Significantly accretive to Cash EPS(4) (immediately accretive in the first fiscal year after completion)
    • Potential for significant future growth and operating margin expansion
    • Estimated SEK 125m ($12.9m) in annual cost synergies, realised within 18 months after completion with potential for additional cost and revenue synergies in the medium to long term

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