ASCENDIS HEALTH LIMITED - Acquisition of Akacia Healthcare Holdings Proprietary Limited

Acquisition of Akacia Healthcare Holdings Proprietary Limited

ASCENDIS HEALTH LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2008/005856/06)
ISIN: ZAE000185005 JSE share code: ASC
(“Ascendis” or “the Company”)

ACQUISITION OF AKACIA HEALTHCARE HOLDINGS PROPRIETARY LIMITED

1.     Introduction

Shareholders are advised that the Company has entered into an agreement on
Wednesday, 18 November 2015, (“Signature Date”) (“the Agreement”) in terms of
which Ascendis will acquire 100% of the issued ordinary share capital of Akacia
Healthcare Holdings Proprietary Limited (“Akacia”), constituting its pharmaceutical
business only (“Akacia Pharma”) (the “Acquisition”).

The Agreement has been entered into with numerous disposing shareholders, of
which the material shareholders holding in excess of 5% include Old Mutual Life
Assurance Company (South Africa) Limited, Investian Investments Proprietary
Limited, Oasis Capital (Mauritius) Limited, CIH Investment Holding Proprietary
Limited, the trustees of Carecross Health Employee Share Incentive Trust and First
Care Management Services Proprietary Limited (collectively the “Disposing
Shareholders”), with effect from the date of fulfilment or waiver of the last of the
conditions precedent as set out in paragraph 4 below (“the Effective Date”).

2.     Rationale for the Acquisition

Akacia Pharma is a leading South African manufacturer, marketer and distributor of
pharmaceutical products specialising in branded, generic, over the counter (“OTC”)
and complementary medicines. The company enjoys competitive positioning within
many market segments in South Africa, including, inter alia, market leading probiotic
brand Reuterina, as well as the Sinucon and Sinuend brands which are ranked in the
top three in the cold and flu market.

Akacia Pharma not only manufactures its own established brands but also
manufactures pharmaceutical products for well-known third parties under contract
licensing arrangements. The company’s diverse capabilities (including both
manufacturing and commercial) are well¬ respected in the South African market and
will therefore further enhance Ascendis’ pharmaceutical division and bolster its
presence as a significant player in the domestic pharmaceutical market. Ascendis’
pharmaceutical division, which currently enjoys a strong presence in the dispensing
doctor and tender markets, is now expected to benefit from entry into new channels
including retail pharmacy, hospital and prescribing doctors as a result of the
Acquisition.

The Akacia Pharma manufacturing facility, valued in excess of R100 million, is a Good
Manufacturing Practices (“GMP”) certified and Medicine Control Council (“MCC”)
licensed manufacturing facility (“Manufacturing Facility”). The acquisition of this
Manufacturing Facility forms part of Ascendis’ vertical integration strategy, which
includes consolidating the manufacture of group products to the extent possible
within the group, allowing Ascendis to unlock vertical integration benefits, which in
turn optimises synergies and improves margins. This Manufacturing Facility is
currently not operating at its expected potential and thus provides Ascendis with the
ability to increase its local manufacturing capability of existing products within its
pharmaceutical and complementary medicine ranges. This will reduce Ascendis’
foreign exchange exposure and is in alignment with Government’s focus on driving
local manufacturing.

Ascendis intends to integrate Akacia Pharma’s products into its existing
pharmaceutical division. By leveraging off existing platforms and resources, Ascendis
intends to further develop the Akacia Pharma business via the introduction of
Ascendis’ strong pipeline of existing products currently under registration. It is
anticipated that this portfolio of products will drive further export growth
opportunities into Africa.

The Akacia Pharma Acquisition and the existing generics portfolio of Pharmachem,
together with the recent acquisition of Farmalider in Spain presents Ascendis with a
strong platform to grow and expand its pharmaceutical business both domestically
and internationally.

3.     Terms of the Acquisition

3.1    The total purchase consideration for the Acquisition (incorporating the R100
       million Manufacturing Facility) of R345,239,375 (“Purchase Consideration”) is
       payable as follows:

       3.1.1 Payable on the last business day of the calendar month in which the
             Effective Date falls (“Closing Date”):
                     3.1.1.1 R230,000,000 payable in cash;
                     3.1.1.2 R111,509,775 to be settled by way of so many Ascendis
                     ordinary shares (“Ascendis Shares”) which when multiplied by
                     the 30 day volume weighted average price (“VWAP”) for the
                     period ending at the end of the month preceding the month
                     when all conditions (other than JSE approval for the listing of
                     the shares) are fulfilled or waived, will be equivalent to
                     R111,509,775; and

       3.1.2 Payable on the first anniversary of the Closing Date:
                    3.1.2.1 A maximum of R3,729,600 payable in cash subject to
                    the achievement of agreed performance targets.

4.     Outstanding conditions precedent

The Acquisition is subject to, inter alia, the following outstanding conditions
precedent which are required to be fulfilled and/or waived:
4.1    Approval for the Acquisition by the relevant Competition Authorities by no
       later than 80 business days after Signature Date;
4.2    Obtaining an exemption from the Takeover Regulations Panel by no later
       than 80 business days after Signature Date;
4.3    Consent of all counter-parties to the material contracts identified during the
       due diligence investigation by no later than 80 business days after Signature
       Date;
4.4    Obtaining the relevant approvals from the Financial Surveillance Department
       of the South African Reserve Bank by no later than 80 business days after
       Signature Date; and
4.5    The unconditional disposal by Akacia of its medical consumable business to
       MSQ Health Proprietary Limited by no later than 80 business days after
       Signature Date.

5.     Financial effects of the Acquisition

Akacia Pharma had a net asset value of R215,220,791 as at 31 July 2015 and is
expected to contribute R38,091,000 by way of sustainable annual earnings before
interest and tax (adjusted for non-recurring items and cost efficiencies) (“EBIT”) to
Ascendis based on the unaudited 12 month management accounts for the period
ended 31 July 2015.

6.     Categorisation of the acquisition

The Acquisition is categorised as a Category 2 transaction in terms of the JSE Listings
Requirements.

19 November 2015
Johannesburg

Arranger and Financial Advisor
Coast2Coast Investments Proprietary Limited

Sponsor
Investec Bank Limited

Date: 19/11/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.