Aspen (APN), South Africa’s leading pharmaceutical company, has announced that all conditions precedent have been met for it to acquire the pharmaceutical business of Australian-based Sigma Pharmaceuticals Limited (Sigma).
The acquisition was approved following the extraordinary meeting of Sigma shareholders held on 14 January 2011. The effective date of change of ownership is 31 January 2011 and will position Aspen as the leading pharmaceutical company in Australia by volume of scripts generated.
Stephen Saad, Aspen’s group chief executive, said “Aspen is excited about this acquisition which enables the Group to accelerate growth in its Australian business and also to stimulate expansion plans into the broader Asia Pacific region. Aspen has already demonstrated its ability to supply high quality products at competitive prices across more than 100 worldwide territories. We have confidence in our Australian management team to leverage Aspen’s world-class procurement, manufacturing and distribution capabilities to ensure the expanded Aspen business delivers growing value in Australia.”
In 2010 Aspen announced that it had reached a formal agreement to acquire Sigma’s pharmaceutical business on a debt-free basis for a cash consideration of AUD 900 million. The purchase consideration is approximately ZAR 6 148 million, based on an AUD/ZAR exchange rate of 0.1464 as at 13 January 2011. The transaction was however subject to a number of conditions precedent which have now been fulfilled.
The Sigma business: Sigma, which has a 98-year legacy in Australia, is listed on the Australian Securities Exchange. Sigma’s pharmaceutical business, which is now being acquired by Aspen, consists of an extensive product portfolio of branded, generic and OTC products which include many well-known and trusted Australian brands as well as five manufacturing facilities. Sigma retains its wholesale business, and is one of three major wholesaler distributors in Australia. Aspen has concluded a long-term distribution agreement with Sigma.
Rationale for the acquisition of Sigma’s pharmaceutical business: Aspen Australia, established in May 2001, markets and distributes pharmaceutical and consumer products. Aspen Australia has succeeded in delivering double-digit growth since inception as a greenfields operation in 2001, and recorded revenue of approximately AUD 180 million in the year ended 30 June 2010. Aspen Australia`s success has been achieved by sound management supported by an outstanding team which has consistently built Aspen`s branded product offering and reputation in Australia. Aspen Australia is currently ranked 7th in terms of volume of Australian scripts generated and its sales representative team has been voted number one in Australia.
On the basis of this successful platform, the Sigma acquisition creates the following opportunities for Aspen:
The extension of Aspen’s existing branded products business in Australia with the addition of Sigma’s branded, generics and OTC portfolios; An established point of entry into the Australian generics and OTC sectors for the introduction of Aspen`s pipeline of generic and OTC products; Securing a distribution channel for generic products through Sigma’s retained wholesale division; Providing additional opportunities to launch Aspen’s prolific product pipeline; Leveraging Aspen’s global manufacturing experience, expertise and capability through an Australian-based manufacturing presence; and Creating a foundation for further development of Aspen`s business in the Asia Pacific region.
Based upon the historic performance of Aspen and Sigma in the Australian market, the combination of Sigma’s pharmaceutical business with Aspen’s existing business in Australia should lead to 1 in every 8 Australian prescriptions being written for an Aspen product and result in Aspen being ranked first by volume of scripts generated in Australia.