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ASPEN GLOBAL ACQUIRES AUSTRALIAN PRODUCT PORTFOLIO
ASPEN PHARMACARE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1985/0002935/06
Share code: APN
ISIN: ZAE000066692
(“Aspen Holdings”)
ASPEN GLOBAL ACQUIRES AUSTRALIAN PRODUCT PORTFOLIO
The Aspen Group (“Aspen”) is pleased to announce that Aspen Global Incorporated (“Aspen Global”), a
wholly owned subsidiary of Aspen Holdings, has reached agreement with GlaxoSmithKline plc (“GSK”) for
the acquisition of a portfolio of 25 established pharmaceutical products (“the Products”) which are
distributed in Australia (“the Transaction”).The Transaction consideration is GBP 172 million
(ZAR 2.2 billion at ZAR 12.72/GBP) based upon a completion date of 31 October 2012 and is subject to
minor reduction should completion be delayed beyond this date.
The Transaction is subject to the following conditions precedent:
- The approval of the Australian competition authorities; and
- The approval of the Australian Foreign Investment Review Board.
The effective date of the Transaction will be the last business day of the calendar month in which the last of
the applicable conditions precedent is fulfilled.
Existing manufacturing arrangements for the Products will be assumed by Aspen Global. Aspen Global
intends to appoint Aspen Australia to distribute the Products.
Funding
The Transaction will be funded from new offshore debt facilities. Arrangements for the raising of the new
debt have been settled, but remain subject to documentation being completed.
Financial effects
The unaudited pro-forma financial effects set out in the tables below have been prepared to assist Aspen
Holdings shareholders to assess the impact of the Transaction on the earnings per share (“EPS”) and diluted
EPS, headline EPS ("HEPS") and diluted headline EPS, diluted normalised HEPS and the net asset value
("NAV") and the tangible NAV ("NTAV") per Aspen Holdings ordinary share as at 31 December 2011 and for
the interim period then ended. It has been assumed for the purposes of the pro-forma financial effects
that the Transaction took place with effect from 1 July 2011 for Statement of Comprehensive Income
purposes and at 31 December 2011 for Statement of Financial Position purposes. The pro-forma financial
effects have been prepared for illustrative purposes only and, because of their nature, they may not fairly
present Aspen’s restated financial position at 31 December 2011 and the restated results of its operations
for the six months then ended. The Directors of Aspen Holdings are responsible for the preparation of the
financial effects which have not been reviewed by the auditors.
The "After" columns represent the effects after the Transaction.
The "Change %" columns compares the "After" columns to the "Before" columns.
The number and weighted average number of shares in issue have been stated net of treasury shares.
“Before” “After” % Change
Cents Cents
Notes (1) (2,3,4,5)
EPS for the six-months ended 31 December 2011 343.6 365.4 6.4%
HEPS for the six-months ended 31 December 2011 316.4 338.2 6.9%
Diluted EPS for the six-months ended 31 December 2011 331.2 352.1 6.3%
Diluted HEPS for the six-months ended 31 December
2011 305.2 326.1 6.8%
Diluted normalised HEPS for the six months ended 31
December 2011 308.1 334.3 8.5%
NAV as at 31 December 2011 3,559.3 3,553.8 (0.2%)
NTAV as at 31 December 2011 11.5 (523.2) (4,631.7%)
Number of shares in issue as at 31 December 2011
(million) 436.5 436.5 -
Weighted average number of shares in issue for the six
months ended at 31 December 2011 (million) 435.1 435.1 -
Weighted average number of diluted shares in issue for
the six months ended at 31 December 2011 (million) 454.5 454.5 -
Notes:
1) Extracted from the published interim financial statements for the six months to 31 December 2011.
2) The figures for the Products were derived from the unaudited management accounts of GSK for the
six months ended 31 December 2011 and the audited financial statements of GlaxoSmithKline
Holdings Pty Ltd for the year ended 31 December 2011.
3) A preliminary assessment has indicated that the intellectual property relating to the Products
constitutes indefinite life assets which have been fairly valued in accordance with future expected
performance and hence no amortisation has been provided for in the pro-forma financial effects
above.
4) Non-recurring transaction costs of R72 million are included in determining the financial effects of
which R48 million has been capitalised. The remaining R24 million is excluded in determining the
impact of the Transaction on diluted normalised HEPS and represents the only adjustment to diluted
HEPS in determining diluted normalised HEPS.
5) Notional interest for the six months ended 31 December 2011 has been provided based on the costs
of financing the Transaction.
The Products
The Products comprise long established pharmaceutical brands of proven performance. The main areas of
therapeutic treatment of the Products are analgesic, antibiotics, anti-virals and the central nervous system.
Other areas covered include anti-nauseant, anti-inflammatory and muscle relaxants. The leading Products
are well recognised brands including Amoxil, Augmentin, Imigran, Kapanol, Lamactil, Mesasal, Timentin,
Valtrex, Zantac and Zofran.
The Products which are the subject of the Transaction recorded revenue of AUD 127.4 million during the
year ended 31 December 2011. During that period Valtrex came off patent and faced generic competition
which has subsequently intensified. Some of the Products have also been subject to the Australian
Government’s mandatory annual price cuts based on competitive discounting to pharmacy. These price
reductions are likely to continue resulting in the revenue expected to be generated by the Products
declining over time. The impact of these factors is illustrated by the Products generating revenue in the six
months to 30 June 2012 of AUD 47.4 million (six months to 30 June 2011: AUD 70.2 million).
Rationale
The Products acquired through the Transaction represent an excellent fit with Aspen’s existing portfolio
and the added revenue will strengthen Aspen’s position as one of the leading pharmaceutical companies in
Australia. Whilst the Products received little promotional focus from GSK, Aspen is confident that it will be
able to leverage its proven ability to reinvigorate older brands and the Products’ considerable brand equity
in order to enhance the value of the portfolio.
Aspen expects the Transaction to be earnings accretive in the year ending 30 June 2013.
Small Related Party Transaction
GSK is an 18.6% shareholder of Aspen Holdings and is a related party to Aspen Holdings in terms of the JSE
listings requirements.BDO Corporate Finance (Pty) Ltd, as the independent professional expert, has
confirmed that the value of the Transaction is fair to the shareholders of Aspen Holdings and their fairness
opinion is available for inspection at Aspen Holdings’ registered office for a period of 28 days from the date
of this announcement.
Durban
15 August 2012
Sponsor:
Investec Bank Limited
The Standard Bank of South Africa Limited
Sole Underwriter and Mandated Lead Arranger
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