Albany Molecular Research Inc. (AMRI) said today it will acquire active pharmaceuticals ingredients (API) manufacturer Prime European Therapeuticals (Euticals) for approximately $358 million, in a deal designed to expand the buyer’s API development and manufacturing operations.

AMRI said the acquisition would position the company as one of the pharmaceutical industry’s largest independent developers and suppliers, while significantly expanding its presence in Europe.

“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,” William S. Marth, AMRI's president and CEO, said in a statement.

AMRI said the deal will expand its expertise in areas that include sterile API, steroids, generics, fermentation, controlled substances, and monobactams. AMRI brings to the combined company an API portfolio that includes 50 active U.S. Drug Master Files (DMFs), 17 EU Certificates of Suitability or Compliance with the European Pharmacopeia, 13 Japanese DMFs, and 6 South Korean DMFs. Several of the company’s APIs have filings in multiple regions, as well as over two dozen other international filings.

Headquartered in Lodi, Italy, privately held Euticals specializes in custom synthesis and manufacture of APIs through a network of API facilities primarily in Italy, Germany, the U.S., and France.

Euticals has a base of more than 400 large pharma, biotech, and generics customers worldwide and generates 75% of its revenue outside North America. Euticals finished last year with approximately $245 million in revenue and $27 million in earnings before interest taxes, depreciation, and amortization (EBIDTA).

For 2016, Euticals has projected revenues of between $245 million and $255 million, as well as adjusted EBITDA of between $34 million and $38 million.

Following the acquisition, more than half of the combined company’s pro forma revenue will come from outside the U.S. AMRI has forecast combined revenue next year of more than $750 million, with adjusted EBIDTA margins of approximately 20%—a figure that includes operational cost savings or “synergies” of $13 million to $15 million over the next 3 years.

The deal is expected to add to AMRI’s non-GAPP diluted earnings per share starting this year.

Euticals CEO Margalit Fine, a former head of European API at Teva, will continue to lead Euticals' operations as a senior executive for the combined company.

AMRI agreed to acquire Euticals through a combination of issuing approximately 7 million shares of its common stock, now valued at $110 million, a $63 million seller note, and the remainder in cash.

The stock will be sold outside the U.S. to investor Lauro Cinquantasette, S.p.A (Lauro 57), on whose behalf Fernando Napolitano will join the board of the combined company.

AMRI said it has entered into debt financing commitments with JP Morgan and Barclays for funds necessary to complete the acquisition. The company said it can manage the resulting increase in debt, which it plans to reduce by EBITDA growth and planned repayments of principal.

The deal is subject to the financing, as well as customary closing conditions, including Hart–Scott–Rodino clearance in the U.S.

AMRI’s purchase of Euticals marks the company’s second acquisition aimed at expanding its API portfolio and its presence outside the U.S. in less than a year. The company bought Gadea for $174 million in July 2015.








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