Recipharm to acquire Corvette Pharmaceutical Services Group for €120m

Adds manufacturing capacity and strengthens lyophilisation capabilities

Thomas Eldered: We will be gaining access to a first class and largely new customer base as well as new capabilities and capacities

Swedish contract development and manufacturing organisation Recipharm has agreed to buy Milan-based Corvette Pharmaceutical Services Group from Italian private equity group LBO Italia Investimenti.

The company will pay €100m, split 50:50 between cash and a senior unsecured convertible bond. Corvette will have approximately €21m in interest-bearing debt, which will be repaid on closing.

Recipharm says transaction will expand its manufacturing capacity, strengthen its leadership in lyophilisation and provide the ability to handle hormones in both vials and ampoules.

The company says the deal will give it access to 'highly interesting geographical areas' including Italy and a number of emerging markets, many of which are new to Recipharm. As a result, the company will have manufacturing assets in the five largest European pharmaceutical markets.

There is little overlap between the customers of each company with Recipharm thus presenting significant cross-selling opportunities.

The acquisition of Corvette is very much in line with our strategic plan

Corvette employs around 265 people across three manufacturing facilities in the Milan region, each specialising in a different technology and business area. Forty-five per cent of its sales are in Italy and 20% in emerging markets.

Sterile injectable manufacturing takes place at Masate where there are capabilities for both lyophilisation and liquid filling of vials and ampoules including hormones supplied to numerous territories including Japan.

Paderno Dugnano is Corvette's API and finished dose form development and manufacturing facility with a number of owned product rights including to mucolytic drug Erdosteine. The facility supplies the global market including the US and Japan. Corvette will be entitled to 15% of any potential Erdosteine net royalties from its US orphan drug indication for a period of ten years from closing.

Corvette's third facility in Lainate handles bulk lyophilisation of sterile beta lactam antibiotics supplied to numerous markets including Japan.

In 2013, the company's revenue and EBITDA were €57.7m and €15m, respectively.

'The acquisition of Corvette is very much in line with our strategic plan and we are very excited to have secured such a high quality company,' said Recipharm's CEO Thomas Eldered.

'We will be gaining access to a first class and largely new customer base as well as new capabilities and capacities that will add to our technology base. Italy is an extremely interesting market made up of many small and mid-size companies where Recipharm currently has little presence. This combined with the significant sales in emerging markets represents an exciting opportunity.'

The transaction is expected to close on 1 October.

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