European private equity firm Cinven today announces that it has agreed to sell AMCo (‘the Group), the niche specialty pharmaceuticals group to TSX/Nasdaq-listed Concordia Healthcare Corp., (‘Concordia’ or ‘the Company’), a diverse healthcare company focused on legacy pharmaceutical products and orphan drugs, for an enterprise value of £2.3 billion, through a combination of cash, common shares of Concordia, and a maximum performance-based earnout of approximately £145 million over the next 12 months.

Cinven created AMCo, which focuses on the sale of niche prescription off-patent products, in 2012 through the transformative merger of Mercury Pharma (‘Mercury’) and Amdipharm, both of which were acquired in bilateral transactions, in August and October 2012 respectively.

Cinven’s Healthcare team identified the opportunity to consolidate the niche pharmaceutical market more than two years prior to this, developing a unique strategy from the outset to merge these two attractive and complementary targets.  Cinven’s combination of Amdipharm with Mercury (with 70% international sales and 80% UK sales, respectively, at the time of acquisition) created a truly global leader.

Since 2012, Cinven and AMCo’s management team, led by John Beighton, have executed a successful ‘buy and build’ strategy, including five value-accretive acquisitions which, when combined with strong underlying organic growth, has doubled the EBITDA of the Group. For 2015, AMCo expects to record pro forma revenues of £345million to £365 million.

Key highlights under Cinven’s ownership include:

  • Successful buy and build strategy: Following the initial transformational merger of Mercury and Amdipharm, five further acquisitions have been completed and fully integrated with support from Cinven’s Portfolio team, expanding both the international footprint and product pipeline of the Group;
  • Internationalisation: The business has been internationalised through a combination of acquisitions and the implementation of an international ‘direct’ strategy to drive expansion. AMCo’s initially UK centric direct sales force has been expanded to encompass markets across Europe and beyond, most recently opening in Dubai to further expand into the Middle East and North Africa; and
  • Strong new product track record: 44 new products have been launched in the last three years and there is a further pipeline of new ‘niche’ drugs.

Commenting on this transaction, Supraj Rajagopalan, Partner at Cinven, said: “Cinven successfully created AMCo – through the combination of two businesses – as a result of bilateral transactions and our strong healthcare sector focus and track record.  We saw an opportunity to create significant value through the consolidation of the relatively fragmented, off-patent, niche pharmaceuticals market and AMCo has certainly achieved that.

“We have worked closely with the highly capable management at AMCo, led by John Beighton, in further strengthening the senior team, internationalising the business, executing and integrating several acquisitions as part of our ‘buy and build’ strategy, and optimising AMCo’s capital structure in order to most effectively achieve growth.  This acquisition by Concordia is a natural next step that will position the combined business perfectly for further growth within the pharma sector. We look forward to generating further upside through our shareholding in Concordia and we wish the AMCo team every success in the future.”

John Beighton, Chief Executive Officer of AMCo, added: “Cinven has been instrumental in the growth and success of the AMCo business, starting with the initial combination of Mercury Pharma with Amdipharm which made us a truly international player. Subsequently, they have provided considerable assistance in areas including international expansion, through their Portfolio team in Asia and Europe; and expertise in M&A, and integration to ensure we generated the most upside quickly from the acquisitions we made. They have been first class in their understanding of the healthcare sector and the dynamics and drivers of our business.

“We look forward to being part of the Concordia business – as the combination with AMCo is expected to create significant opportunities for further growth in the global pharmaceutical sector. We have a shared vision for growth that should greatly benefit employees and stakeholders of the combined business.”

Mark Thompson, Concordia’s Chairman and Chief Executive Officer, commented:“This acquisition is a key milestone and pivotal turning point in Concordia’s strategy, which gives us the platform to take our business to the next level. We are not only acquiring products and commercial infrastructure, but a seasoned management team who has done a fantastic job of building a solid and successful international pharma operation.

“The combination of our highly complementary yet geographically diverse businesses is truly transformational. It will uniquely position the combined company as a leading, international pharmaceutical company with extensive geographic reach, a diversified and attractive product portfolio, and an asset-light business model that we expect will allow us to focus investments and resources on further growing our business.”

Advisers on the transaction included: advising Cinven / AMCo – Jefferies, Rothschild, Clifford Chance, Torys LLP, Jones Day, Deloitte, KPMG, PwC, Bourne Partners and Pharmacloud. Advising Concordia on the transaction included – Goldman Sachs, Sullivan & Cromwell, Fasken Martineau DuMoulin LLP, Simmons & Simmons LLP and Ernst & Young.