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Proposed Acquisition of the Healthcare Products Business from Sinclair IS Pharma plc

Proposed Acquisition of the Healthcare Products Business from Sinclair IS Pharma plc

The Board of Alliance Pharma plc ("Alliance" or the "Company"), the specialty pharmaceutical company, today announces that it has entered into a conditional agreement with Sinclair IS Pharma plc ("Sinclair") to acquire certain assets and businesses principally focused on dermatology (the "Healthcare Products Business") for a consideration of £127.5 million, plus an estimated £4.7 million for inventory, to be satisfied partly in cash, funded by way of the New Loans, and partly by the issue and allotment of the Vendor Consideration Shares pursuant to the terms of the Acquisition Agreement.

The Acquisition constitutes a reverse takeover under the AIM Rules and, therefore, Completion is conditional on, amongst other things, receiving the approval of Shareholders. This approval will be sought at the General Meeting to be held at the offices of Fasken Martineau LLP, 17 Hanover Square, London W1S 1HU at 10.00 a.m. on 14 December 2015.  Completion and Re-admission are expected to take place on 17 December 2015.

A combined Admission Document and Circular is being sent to the Company's shareholders today and will be available on the Investor Relations section of the Company's website at www.alliancepharmaceuticals.com.

Transaction highlights:

  • Alliance to acquire 27 products including five key growth brands (Kelo-Cote™, Flammacerium™, Aloclair™, Kelo-stretch™ and Atopiclair™). The acquisition of these complementary assets will materially increase the scale of the business.
  • The Acquisition will significantly increase the Company's footprint outside of the UK and will provide an enhanced platform for further corporate development.
  • In the 12 months ended 30 June 2015, the Healthcare Products Business generated revenues of £43.3 million and EBITDA before exceptional items of £9.0 million. It is estimated that cost-saving synergies of approximately £5.0 million will be achievable from the 12 months ending 31 December 2016.
  • The Directors believe that, taking into account the business and prospects of the Enlarged Group, the Acquisition will be significantly accretive to earnings per share on an adjusted basis for the 12 months ending 31 December 2016.
  • The Directors further believe that the return on invested capital associated with the Acquisition will exceed the Group's weighted average cost of capital in the 12 months ending 31 December 2017 (assuming a weighted average cost of capital of eight per cent.).
  • The Acquisition and associated expenses will be financed by a fully underwritten vendor placing raising gross proceeds of £78.5 million and by £54.2 million to be drawn down under the New Loans.
  • The proposed vendor placing will comprise the issue of 191,463,414 new Ordinary Shares at a price of 41 pence per share, a discount of approximately 19.6 per cent. to the closing mid-market price of 51 pence per ordinary share on 25 November 2015.
  • Irrevocable undertakings to vote in favour of the Resolutions have been received from the Directors and certain Shareholders in respect of 123,484,458 Ordinary Shares, in aggregate, representing approximately 46.7 per cent. of the Existing Issued Share Capital.
  • The Company has also granted the Option to Numis under the Placing Agreement in order to enable Numis to deal with additional demand under the Placing in the event that requests to participate in the Placing from institutional and certain other investors are received during the period from the date of this announcement to 5.00 p.m. on 2 December 2015. Any Ordinary Shares issued pursuant to the exercise of the option will be issued on the same terms and conditions as the Vendor Consideration Shares. The maximum number of new Ordinary Shares that may be issued pursuant to the exercise of options is 12,195,121.

John Dawson, Chief Executive of Alliance, commented:

"This Acquisition represents a very significant development for Alliance. On completion, Alliance will be a significantly larger business with synergies in existing markets. Having over half of our business outside of the UK, we will have a greater ability to compete for international deals and in-licensing opportunities."

Conference call for analysts

A conference call for analysts will be held this morning at 7.45am GMT. For further details of the conference call, please contact Buchanan on 020 7466 5000.

 

Expected timetable of principal events

Announcement of the Placing and Acquisition
 

26 November 2015

Publication date of the Admission Document

26 November 2015

Latest time and date for receipt of Forms of Proxy in respect of the General Meeting

10.00 a.m. on 12 December 2015

General Meeting

10.00 a.m. on 14 December 2015

Expected date and time of suspension of trading of the Ordinary Shares on AIM

4.30 p.m. on 16 December 2015

Expected date of completion of the Acquisition

8.00 a.m. on 17 December 2015

Expected date and time of Re-admission becoming effective and dealings in the Ordinary Shares commencing on AIM

8.00 a.m. on 17 December 2015

 
 

Re-admission and Placing statistics

Existing Issued Share Capital

264,520,610 Ordinary Shares

Number of Vendor Consideration Shares proposed to be issued

191,463,414

Maximum number of Option Shares to be issued pursuant to the Option

12,195,121

Placing Price

41 pence per Ordinary Share

Enlarged Issued Share Capital (assuming no Option Shares are issued)

455,984,024 Ordinary Shares

Enlarged Issued Share Capital (assuming the maximum number of Option Shares are issued)

468,179,145 Ordinary Shares

Gross value of the Vendor Consideration Shares at the Placing Price

£78.5 million

Gross value of the Option Shares at the Placing Price (assuming the maximum number of Option Shares are issued)

£5.0 million

Market capitalisation of the Enlarged Group at the Placing Price immediately following Re-admission (assuming no Option Shares are issued)

£187.0 million

Market capitalisation of the Enlarged Group at the Placing Price immediately following Re-admission (assuming the maximum number of Option Shares are issued)

£192.0 million

 

Further information:

Alliance Pharma plc
John Dawson, Chief Executive
+ 44 (0) 1249 466966

Numis Securities Limited
Nominated Adviser: Michael Meade / Freddie Barnfield
+ 44 (0) 20 7260 1000
Corporate Broking: David Poutney / James Black

Buchanan
Mark Court / Sophie Cowles / Jane Glover
+ 44 (0) 20 7466 5000
 

Full RNS Announcement

Proposed Acquisition & Share Placing (PDF 1.2MB)