Aurobindo to buy Actavis' loss-making West Europe units

Deal expands Aurobindo's front-end operations into five segments with 1,200 products, additional pipeline of 200 products

Hyderabad-based drug maker Aurobindo Pharma on Saturday said it would buy Irish drug maker Actavis’ loss-making generics operations in seven western European countries.  

The company said the total consideration for the acquisition was expected to be Euro 30 million and would depend upon the cash and net working capital position when the deal is closed. Aurobindo plans to fund the acquisition through internal accruals. The transaction is conditional on antitrust approvals and completion of employee consultation processes. Aurobindo expects to buy personnel, commercial infrastructure, products, marketing authorisations and dossier licence rights in France, Italy, Spain, Portugal, Belgium, Germany and the Netherlands.

Actavis and Aurobindo will be entering into a long-term commercial and supply arrangement to support the growth plans of these operations. The acquisition expands Aurobindo’s front-end operations into five segments —generics, prescription products, over-the-counter products, hospital products and generics tenders — with about 1,200 products and 200 more in the works.

The management estimates net sales for the businesses acquired would be Euro 320 million in 2013, growing at 10 per cent year-on-year. Aurobindo expects these loss-making businesses to turn profitable in combination with its vertically integrated platform. Since 2006, Aurobindo has been expanding its reach in Europe, with operations in the UK, Spain and Germany. The acquisition will help Aurobindo achieve critical mass in western Europe, quickening entry into the top 10 league in some key markets.

“This transaction will complement our strategy of pursuing organic growth along with value-creating acquisitions within our served markets and adding complementary growth platforms to provide scale and revenue diversity,” senior vice-president of European operations, V Muralidharan, said.

Jefferies International Ltd was the financial advisor and Herbert Smith Freehills the legal counsel to Aurobindo. Rothschild and Latham & Watkins were the financial advisor and legal counsel to Actavis, respectively.