Drug manufacturer and distributor, Sigma Pharmaceuticals has been on plenty of broker lists of companies that could raise fresh capital.
But up till yesterday, it hadn’t moved.
Then it did, coupling a brief look at its interim profit figures with news of a proposed acquisition and news of a near $300 million capital raising that is obviously designed to inject fresh capital into the group, as well as lowering debt.
It’s raising $297 million in a accelerated renounceable entitlement offer and is planning to buy a pharmaceutical brand portfolio and manufacturing facility from Bristol-Myers Squibb for $60 million in cash.
Net proceeds from the equity raising will be used to fund the acquisition and reduce Sigma’s gearing.
The company also reported first-half net profit of $32.2 million, up 4.9%.
Sigma will offer investors one share for every three they already own at $1.02 apiece, a discount to the closing share price of $1.215 last Friday.
The issue is fully underwritten.
A trading halt remains in place while the capital raising happens. It remains in place until this Friday, September 11.
The company plans to use the money to fund the acquisition, which includes a portfolio of branded drugs and a factory in Melbourne.
The 4.9% rise in net earnings came after a 4% fall in earnings before interest, tax, depreciation and amortisation fell 4% per cent to $99.1 million.
Revenue rose 3.5 per cent to $1.54 billion in the six months.
Under a deal with BMS, Sigma will acquire the right to make, market and distribute 15 brands in Australia and New Zealand, including Lipostat and Pravachol.
Sigma will also have the right to export most of the acquired brands to New Zealand and will acquire a pharmaceutical manufacturing facility at Noble Park in Victoria.
Sigma chief executive Elmo de Alwis said the acquisition from BMS was consistent with Sigma’s strategy of investing in and growing its branded prescription portfolio.
"The acquired brands are well-recognised originator brands with established positions in large market segments,” he said in the statement.
"They are a strong fit with existing Sigma brands, further broadening Sigma’s existing product offering to the pharmacy channel.”
“The Acquisition allows Sigma to capitalise on its proven ability to sustain the market presence of well known brands and to build on its strong track record of acquisition of brand portfolios from GlaxoSmithKline, Wyeth and Abbott.”
Sigma and BMS will also enter into a manufacturing agreement for a period of up to five years, under which Sigma will manufacture certain pharmaceutical products for BMS for distribution overseas.
Sigma said the acquired brand portfolio and manufacturing contracts currently generate annual turnover of about $50 million, comprising $33 million from acquired brands and $17 million from contract manufacturing.
"Sigma estimates that the EBITDA contribution from the Acquisition in the year ending 31 January 2011 will be A$15-17m," the company said yesterday.
Sigma estimates that the EBITDA contribution from the acquisition in the year ending January 31, 2011 will be $15 million to $17 million.
