pharmaceutical ingredients

H.I.G. Carves BioVectra from Mallinckrodt

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Biopharmaceutical giant Mallinckrodt has agreed to sell its subsidiary BioVectra to H.I.G. Capital for $250 million. The purchase price is comprised of cash at closing of $135 million, a long-term note for $40 million, and contingent payments of up to $75 million.

BioVectra is a contract development and manufacturing company that supplies ingredients for pharmaceutical and biotechnology companies in North America and Europe. The company’s products are used in the treatment of cancer, kidney disease, cardiovascular disease, multiple sclerosis, and other serious diseases.

BioVectra will continue to supply pharmaceutical ingredients to Mallinckrodt’s specialty brands business under a long-term agreement. This transaction includes all BioVectra’s Canadian facilities in Prince Edward Island and Nova Scotia (with a combined 110,000 sq. ft. of manufacturing space), as well as its employees. BioVectra is headquartered in Charlottetown, PE (www.biovectra.com).

“We are excited to support BioVectra’s exceptional leadership and highly dedicated employees,” said Mike Gallagher, a managing director at H.I.G. “BioVectra demonstrates a tremendous ability to generate robust organic growth and utilizes a broad set of technical capabilities to deliver outstanding service and quality. They are completing major capital expenditure programs to significantly expand capacity and the company is well-positioned to capitalize on the growing demand for their services.”

H.I.G. specializes in providing capital to small and medium-sized companies and invests in management-led buyouts and recapitalizations of manufacturing and service businesses. H.I.G. has more than $30 billion of capital under management. The firm is based in Miami with additional offices across the US, Europe, and South America (www.higcapital.com).

Mallinckrodt (NYSE: MNK) develops, manufactures, and distributes branded and generic specialty pharmaceutical products. The stock of the company has performed poorly in 2019, declining nearly 78% over the past three months, amid concerns on what affect opioid litigation will have on the company. Mallinckrodt, with annual revenues of more than $3 billion, has US headquarters in St. Louis and global headquarters near London in Staines-upon-Thames (www.mallinckrodt.com).

“This transaction continues to advance Mallinckrodt’s strategic focus on branded, high-growth biopharmaceuticals by monetizing a non-core business,” said Mark Trudeau, president and chief executive officer of Mallinckrodt. “While we recognize the longer-term growth potential for BioVectra, we believe that the structure of this deal enables us to participate in the future success of the business, and therefore we see this sale as the best option for both Mallinckrodt and BioVectra moving forward.”

Goldman Sachs was the financial advisor to Mallinckrodt on this transaction and Wells Fargo Securities was the financial advisor to H.I.G.

The sale of BioVectra to H.I.G. is expected to close in the fourth quarter of 2019.

© 2019 Private Equity Professional | September 10, 2019

H.I.G. Exits AMPAC Fine Chemicals

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H.I.G. Capital has agreed to sell AMPAC Fine Chemicals to South Korean conglomerate SK Holdings.

AMPAC Fine Chemicals (AFC) is a supplier of high value-added active pharmaceutical ingredients and intermediates used in treating diseases such as cancer, central nervous system (CNS) disorders and certain viral infections. Customers of AFC include blue-chip pharmaceutical and biotech companies.

The company has four facilities, one each in Rancho Cordova and El Dorado Hills, CA; La Porte, TX; and Petersburg, VA.  AFC, led by CEO Dr. Aslam Malik, is headquartered in Rancho Cordova (www.ampacfinechemicals.com).

H.I.G. acquired AFC in February 2014 as part of its acquisition of publicly-traded American Pacific Corporation. AFC’s sister company, AMPAC Specialty Chemicals, was sold to Huntsman Family Investments, the private investment platform for the Jon M. Huntsman, Sr. family, in December 2015.

“AFC is a terrific organization with exceptional leadership,” said Fraser Preston, Managing Director of H.I.G. “Dr. Malik and his team have transformed the business since we acquired it – adding technical capabilities, diversifying the customer base, building an expanded and flexible manufacturing footprint and delivering industry-leading organic growth every year since our acquisition.”

Under H.I.G.’s ownership, AFC expanded the manufacturing footprint at its Rancho Cordova facility, launched AMPAC Analytical, a provider of pharmaceutical product analysis and testing services; acquired a state-of-the-art plant in Petersburg, VA from UniTao Pharmaceuticals in October 2016; and enhanced AFC’s product pipeline.

“H.I.G. has been thoughtful and supportive of AFC since our partnership began several years ago,” said Dr. Malik. “In addition to supporting AFC with growth capital; allowing us to expand our Rancho Cordova facility; start AMPAC Analytical; restart operations at our La Porte site; and acquire the state-of-the-art plant in Petersburg, VA, H.I.G. has provided us with the freedom and flexibility needed to grow the business and served as a dynamic thought partner to our senior leadership team.”

H.I.G. specializes in providing capital to small and medium-sized companies and invests in management-led buyouts and recapitalizations of manufacturing and service businesses. H.I.G. has more than $25 billion of capital under management. The firm is based in Miami with additional offices in New York, Boston, Chicago, Dallas, Los Angeles, San Francisco, Atlanta, London, Hamburg, Madrid, Milan, Paris, Bogotá, Mexico City and Rio de Janeiro (www.higcapital.com).

SK Holdings is an international conglomerate with operations in energy and chemicals, information and telecommunication, and semiconductors. The company is headquartered in Seoul, South Korea (www.sk.com).

© 2018 Private Equity Professional | July 18, 2018

SK Capital to Acquire Perrigo API

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SK Capital has signed an agreement to acquire Perrigo API, the active pharmaceutical ingredients business of publicly-traded Perrigo Company. The transaction is expected to close during the fourth quarter and the company will be renamed prior to closing.

Perrigo API is a developer and manufacturer of generic active pharmaceutical ingredients (APIs) and finished dose forms (a tablet, capsule or solution that contains an API) for the branded and generic pharmaceutical industries. The business was founded in 1987 and has operations primarily located in Israel with supporting functions in the US and India (www.perrigo.com/api).

As part of the agreement, Perrigo and SK Capital have agreed to enter into a long-term supply agreement for Perrigo API to supply multiple existing commercial and pipeline APIs to Perrigo.

“Perrigo API is a proven industry leader with strong innovation and manufacturing capabilities and a quality and customer-centric culture,” said Aaron Davenport, Managing Director at SK Capital. “The skills and expertise of the leadership team, dedicated employee-base and the quality of the manufacturing facilities have enabled the business to establish a strong market position.”

SK Capital specializes in the specialty materials, chemicals and healthcare sectors and typically invests equity of $100 million to $200 million in each portfolio company. SK Capital’s portfolio companies generate revenues of approximately $6 billion annually and employ approximately 8,700 people. The firm has more than $1.9 billion of assets under management and is based in New York (www.skcapitalpartners.com).

The buy of Perrigo API complements other companies that SK Capital owns and operates in the active pharmaceutical ingredients and finished dose forms value chain including Noramco, Tasmanian Alkaloids and Halo Pharmaceutical, all of which will continue to operate independently post-acquisition.

Four experienced Israeli pharmaceutical executives will be joining the board of directors of Perrigo API in partnership with SK Capital: Itzhak Krinsky, Meron Mann, Iftach Seri and Arik Yaari. These executives bring decades of experience managing pharmaceutical businesses including various roles as executives with Teva Pharmaceutical and Sun Pharma.

“We believe tremendous value can be created through further investments in people, company culture, processes and technologies,” said Mr. Seri. “We look forward to collaborating with the management team and employees to support their continued growth and building a successful working relationship with Perrigo through our long-term supply agreement.”

Perrigo Company (NYSE: PRGO) is an international manufacturer of private label over-the-counter pharmaceuticals based in Allegan, MI (www.perrigo.com).

RBC Capital Markets and Rothschild acted as SK Capital’s joint buy side advisors on this transaction.

© 2017 Private Equity Professional | August 10, 2017