Investment | Ascendis to Buy Remedica, Scitec for as Much as $566 Million

Johannesburg, South Africa, Capital Markets in Africa: Ascendis Health Limited entered agreements to buy separate pharmaceutical and sports-nutrition companies for a total of as much as 505 million euros ($566 million), and will pay for the purchases through debt facilities and a potential share sale.

The company will pay 260 million euros to 335 million euros for Cyprus-based pharmaceutical company Remedica Holdings Limited and about 170 million euros for Scitec International Sarl, Johannesburg-based Ascendis said in a statement Tuesday. Shareholders representing about 63 percent of Ascendis shares have agreed to support the deals.

The transactions enable Ascendis to “significantly grow its European footprint,” which currently comprises Farmalider SA, a Spanish business it bought in August. The purchases “will create a natural rand hedge,” with about half of the company’s sales to come from foreign operations after the transactions are concluded, the company said.

Ascendis shares rose 4.7 percent to 23.40 rand at 11:28 a.m. in Johannesburg, valuing the company at 6.9 billion rand ($439 million). The stock has gained 17 percent this year, compared with a 4.3 percent increase in the FTSE/JSE Africa All Shares Index.

South African companies earning revenue outside the country benefit from weakness in the rand, which has depreciated 27 percent against the dollar since the start of 2015, the most among major currencies tracked by Bloomberg.

Remedica develops and produces generic pharmaceuticals and has more than 300 products in its range. Ascendis will fund the purchase with a 90 million-euro debt facility from HSBC Bank Plc and Absa Bank Ltd., 10 million euros of Ascendis shares and either a 1.2 billion-rand rights offer or vendor consideration placement. HSBC and Absa have agreed to underwrite the share sale.

Ascendis will obtain a further 80 million-euro debt facility from HSBC and Absa for the Scitec purchase, and will pay the balance with proceeds from the share sale or vendor consideration placement.

South Africa: Bloomberg Business News