AMRI ($AMRI) has agreed to buy out Italian API specialist Euticals for $358 million in stock, cash and a seller note as the CRO looks to expand its manufacturing footprint and European reach.
Euticals--a privately-held company headquartered in Lodi, Italy--specializes in custom synthesis and the manufacture of active pharmaceutical ingredients (APIs) as well as generics. It operates a network of API facilities primarily in Italy, Germany, the 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 Marth, president and CEO of the New York-based company.
"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, 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.”
With 75% of revenue outside North America, Euticals also opens up many new markets for AMRI--more than half AMRI's combined pro-forma revenue is expected to come outside of the U.S.
On a stand-alone basis, Euticals' full year 2016 revenue is forecast to be between $245 million and $255 million, with adjusted EBITDA of between $34 million and $38 million.
And on a pro-forma basis including synergies, AMRI's full year 2017 revenue is forecast to exceed $750 million, with adjusted EBITDA margins of around 20%.
The CRO will pay for the company through the issuance of around 7 million shares of AMRI common stock (currently valued at $110 million, around 19.75% of AMRI common stock); a seller note of $63 million; and the remainder in cash.
Including Euticals, AMRI believes that it will have the “financial strength to manage its increased debt” from the deal.
The buyout also builds on the $41 million AMRI paid out for the contract manufacturer Cedarburg Pharmaceuticals back in 2014--all of which forms part of its strategy to moving more deeply in to API production, and away from its old model that was built around royalties.
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