| Tue 28 Nov 2017, 14:58 | | ASCENDIS HEALTH LIMITED - Acquisition of 100% of Kyron Laboratories Proprietary Limited |
|
ASC 201711280047A
Acquisition of 100% of Kyron Laboratories 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”)
VOLUNTARY ANNOUNCEMENT: ACQUISITION OF 100% OF KYRON LABORATORIES
PROPRIETARY LIMITED
1. Introduction
Ascendis shareholders are advised that the Company has entered into an agreement in terms of which
Ascendis will acquire, directly or indirectly, the entire issued share capital and loan accounts of Kyron
Laboratories Proprietary Limited (“Kyron” or the “Business”) for a consideration of R396.4 million upfront
plus a performance-based deferred portion (the “Purchase Consideration”), from Nixsim Proprietary
Limited (the “Seller”) (the “Proposed Transaction”).
Kyron is a specialist vertically-integrated animal health company founded in 1990, which manufactures
and markets a wide range of market leading pharmaceutical and nutritional products supplied mainly
through wholesalers to over 1,000 veterinary practices in South Africa and Sub-Saharan Africa. Kyron
focuses on three main categories:
- Consumer pet products sold though veterinary practices;
- Veterinary pharmaceutical products and practice aids; and
- Equipment and instruments used by veterinarians and farmers.
Kyron has a leading market presence in the animal mobility, probiotics and health and grooming
categories. It is the foremost supplier of compounding pharmaceutical products for veterinarians and
its key brands include Mobiflex, Protexin, Ultrum, Antezole, Shoo-fly and Mirra-Cote.
Kyron is a strategic bolt-on to the Ascendis Phyto-Vet division and demonstrates strong free cash flow
generation and EBITDA margins which are expected to enhance the overall margins of the Phyto-Vet
division.
2. Strategic rationale
The Proposed Transaction is an excellent strategic fit for Ascendis Animal Health as the Business
covers complementary therapeutic areas. Ascendis Phyto-Vet, which incorporates Ascendis Animal
Health and Ascendis Biosciences, leverages expertise in the areas of entomology, horticulture,
veterinary sciences and agronomy to drive its competitive advantage. The conclusion of the Proposed
Transaction will place Ascendis Animal Health as one of the leading local holistic animal healthcare
players in the South African market, offering a wide range of prescription and OTC medicines, health
and grooming products and surgical equipment for both the farming and companion animal markets.
Ascendis’ strategy is to create a synergistic group of health brands that cover the value chain from
import of raw materials to manufacture and distribution of products to consumers via retail and direct
selling channels, spanning across human, plant and animal health.
Key features of the Proposed Transaction include:
- Acquisition of well-known brands developed on the back of innovation and attention to customer
needs and trends, such as the compounding pharmacy service for veterinarians providing
specialised prescription products and the supply of surgical equipment directly to veterinarians;
- Strengthens the manufacturing capability of the Ascendis Phyto-Vet division;
- A significant portion of Kyron’s sales stem from products registered in line with the Department
of Agriculture’s Act 36, which is regarded as a strong barrier to entry;
- Further expansion into the profitable and growing animal health industry to complement
Ascendis Phyto-Vet’s recent acquisition of the Cipla animal health business;
- Entering the health and grooming market for companion animals to complement the existing
Marltons pet accessories business into the FMCG channel; and
- Expansion into the FMCG and co-operative channel for Kyron through cross-selling products
into the existing channels of the Phyto-Vet business.
3. Salient terms of the Proposed Transaction
The Purchase Consideration is limited to a maximum of R450 million and will be settled as follows:
3.1 R396.4 million (“Day 1 Payment”) paid to the Seller, which will be settled on the closing date
of the Proposed Transaction (“Closing Date”) as follows:
i. R304.6 million cash plus interest accrued from 1 October 2017 until the Closing
Date; and
ii. R91.8 million through the issue of Ascendis ordinary shares at the applicable
30 day volume weighted average price on closing, subject to a minimum of
R18.00 per share;
3.2 Two further payments based on the performance of a specific portion of the Business, to be
paid on the first and second anniversaries of the Closing Date (respectively).
As at the date of this announcement, the Proposed Transaction remains subject to conditions precedent
which are usual and customary for a transaction of this nature.
4. Financial Information
The profit after tax of Kyron was R47.6 million (excluding once-off profits of R11.9 million) for the
financial year ending 28 February 2017 and the net asset value was R52.6 million as at 28 February
2017.
5. Categorisation of the Proposed Transaction
At the time of signing on 15 September 2017 the Proposed Transaction was not categorised in terms
of the JSE Limited Listings Requirements (“Listings Requirements”) and therefore this announcement
is made on a voluntary basis.
28 November 2017
Johannesburg
Corporate Advisor and Financial Advisor
Coast2Coast Capital Proprietary Limited
Sponsor
Investec Bank Limited
Date: 28/11/2017 02:58:00 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.
