Recipharm to acquire Kemwell’s CDMO biz

Signs two separate strategic agreements in India, US and Sweden

Recipharm has signed two separate agreements to acquire Kemwell’s pharmaceutical contract development and manufacturing (CDMO) businesses.

The first acquisition, comprising US and Swedish operations, is expected to close during the second quarter 2016, after review by the Swedish Competition Authority, while the second, comprising operations in India, is conditional on governmental approvals and expected to close before year end.

The transactions will be financed by already available funds, existing credit facilities, a share issue in kind to the sellers and a proposed share issue of approximately SEK 850 million with preferential rights for existing shareholders.

The acquisition price for the operations in India amounts to $120 million on a cash and debt free basis. The consideration will be paid in cash to the sellers, the founding Bagaria family and parties related to the family, at closing of the acquisition, which is expected to take place before year end. The final price will be subject to adjustments for changes in currency exchange rates. All financial debt will be settled at closing of the acquisition.

The purchase price will be financed through the proposed share issue of approximately SEK 850 million with preferential rights for existing shareholders expected to be completed by the end of the second quarter (the ‘proposed rights issue’) as well as through available funds and existing credit facilities.

The agreement also includes a right of first negotiation to acquire Kemwell’s Indian biopharma business, which is not included in the transaction and will continue to be retained by the sellers

The transaction is subject to governmental approvals, including approval from the Indian Foreign Investment Promotion Board (FIPB).