AMRI bets on manufacturing with $41M Cedarburg buyout

Former Teva exec William Marth is the new CEO of AMRI
AMRI CEO William Marth

AMRI ($AMRI) has inked a deal to trade $41 million for contract manufacturer Cedarburg Pharmaceuticals, looking to broaden its capabilities in the sector and home in on API production.

Under the agreement, AMRI will absorb the Wisconsin-headquartered CMO, which expects to bring in $19 million in revenue this year. The company has a track record of producing a broad base of APIs and has worked on 13 FDA-approved drugs, AMRI said. Cedarburg should add as much as $14 million to AMRI's 2014 revenue, which could reach nearly $300 million, according to the company.

For AMRI, a contractor in transition, the move supports a renewed focus on manufacturing as it moves away from its old reliance on royalties. After posting a string of quarterly losses as it realigned its business, AMRI has soared on high demand for its large-scale manufacturing services, and the Cedarburg buyout is an effort to keep those revenues rolling, CEO William Marth said.

"This transaction represents an important first step in building out our API capabilities, broadens our offerings and customer base and provides us with an ideal platform to pursue additional value-creation opportunities," Marth said in a statement.

That'll help offset an expected 29% decline in royalty revenue for the New York company, which is moving on from the December retirement of founding CEO Thomas D'Ambra. To prepare for the shift, AMRI has long been building up its CMO capacity, and the strategy is already paying off: Last year, AMRI pulled in $246.6 million in revenue on the year, a 9% increase over 2012, with net income coming in at $12.7 million to beat out the prior year's $3.8 million loss.

- read the announcement

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