AMRI has signed a definitive agreement to acquire all outstanding shares of Prime European Therapeuticals S.p.A., also known as "Euticals", in a transaction valued at approximately $358 million (EUR 315 million), consisting of shares of AMRI common stock, cash, and a seller note.
Euticals is a privately-held company headquartered in Lodi, Italy, specializing in custom synthesis and the manufacture of active pharmaceutical ingredients (APIs). It operates a network of API facilities primarily in Italy, Germany, U.S. and France.
"The acquisition of Euticals will provide us an established custom synthesis presence in Europe and will further build on our expertise in complex APIs, positioning AMRI as a preeminent provider of contract research, development and manufacturing services to the pharmaceutical industry," said William S. Marth, AMRI's president and chief executive officer.
"Euticals' expertise with niche and high barrier to entry technologies and products, including certain tetracyclines, monobactams, sterile and fermented APIs and controlled substances, will be a tremendous asset to us. Additionally, Euticals' large base of over 400 customers will provide us with a number of new large pharma, biotech and generics partners, further extending our global reach and diversifying our revenue.
"Importantly, I am pleased that in connection with the closing of the transaction, Fernando Napolitano will be joining our Board of Directors on behalf of Lauro Cinquantesette, S.p.A (Lauro 57) and its majority investors, Clessidra Capital Partners II and Mandarin Capital Partner SCA SICAR. Clessidra's and Mandarin's combined expertise, deep contacts within the European pharmaceutical community and continued guidance will be invaluable to our efforts going forward. Margalit Fine, Euticals' chief executive officer and former head of European API at Teva, will be leading Euticals' operations as a senior executive for the combined company," Mr. Marth said.
"On behalf of Lauro 57 and its investors, we couldn't be more pleased to be joining AMRI," said Clessidra Chief Executive Officer,Maurizio Bottinelli. "Its expertise in developing and manufacturing complex pharmaceutical products is well known and we look forward to joining forces to further expand our presence in the European community."
Strategic Benefits of the Transaction
- Significantly expands AMRI's capabilities in custom and complex APIs
- Provides AMRI with an established European custom synthesis presence
- Expands expertise in multiple areas: sterile API, steroids, generics, fermentation, controlled substances and monobactams
- Provides an API portfolio that includes 50 active US Drug Master Files (DMFs), 17 EU Certificates of Suitability (COS) or Compliance with the European Pharmacopeia (CEP), 13 Japanese DMFs and 6 South Korean DMFs; with several APIs having filings in more than one of these areas and over two dozen other international filings
- Provides AMRI with global scale and a diverse customer and revenue base
- Euticals brings over 400 customers with no customer concentration
- With 75% of revenue outside North America, Euticals opens up many new markets for AMRI; more than half AMRI's combined proforma revenue is expected to be ex U.S.
- Euticals brings additional portfolio diversification in generics; AMRI to leverage U.S. base to include Euticals' strong generic portfolio
Euticals operates a highly regarded API, custom synthesis and fine chemical development and manufacturing business with 2015 revenue and EBITDA of approximately $245 million and $27 million respectively. On a stand-alone basis, Euticals' full year 2016 revenue is forecast to be between $245 million and $255 million, with adjusted EBITDA1 of between $34 million and $38 million, implying a purchase price multiple, prior to anticipated synergies, of approximately 9.9 times 2016 adjusted EBITDA at the midpoint of the range and excluding deal related costs or purchase accounting impacts. The transaction is expected to be accretive to AMRI's 2016 non-GAAP diluted earnings per share. AMRI expects to generate operational synergies of $13 to $15 million over the next three years. On a pro forma basis including synergies, AMRI's full year 2017 revenue is forecast to exceed$750 million, with adjusted EBITDA margins of approximately 20%.