Aspen Pharmacare, a multinational South African holding company for pharmaceutical concerns, and the largest drug company in Africa, says it will raise up to 1.9 billion rand by selling a portfolio of products in Australia and New Zealand to US group Mylan.
Aspen, whose shares have more than halved since September 2018 on concerns that the group has too much debt, said it will use the funds to reduce gearing.
In December 2018, the South African drugmaker entered into a distribution agreement with Mylan subsidiary Alphapharm regarding the portfolio of prescription and over-the-counter products sold mainly in Australia and New Zealand. Mylan was also given an option to buy the portfolio.
Aspen revealed Mylan will buy the portfolio for a maximum consideration of 188 million Australian dollar, of which 93 million Australian dollar is payable by the end of May, 30 million Australian dollar is due in January 2020, and up to 65 million Australian dollar is payable in September 2020.
The value of the last payment is partially contingent on Aspen satisfying certain conditions.
A statement released by Aspen said “this divestment is in line with the group’s ongoing portfolio management approach and its stated intention to not only acquire value-enhancing products, but to also divest of non-core assets, thereby ensuring enhanced operational focus”.
The company noted that the funds will be sued to reduce its debt, which was more than 50 billion rand at the last count.
On May 17, 2019, Aspen said it had finally been granted approval to sell its nutritionals business to France’s Lactalis. It plans to use the estimated 10.4 billion rand in net proceeds to reduce borrowings.