UCB Sells Generics Unit to Advent and Avista for $1.53 Billion

Belgian drugmaker UCB SA announced an agreement Friday, Nov. 7, to sell Princeton, N.J.-based generics maker Kremers Urban Pharmaceuticals Inc. to buyout shops Advent International Corp. and Avista Capital Partners for $1.53 billion.

The deal follows an auction run by Lazard that reportedly attracted interest from other private equity sectors and Lake Forest, Ill.-based specialty drugmaker Akorn Inc., though offers came in below the targeted $2 billion price tag.

UCB, which has spent the past decade transforming itself from a chemicals company with 1920s roots into a drug maker, is selling the business six years after adding it through its €4.4 billion ($5.5 billion) swoop on Germany's Schwarz Pharma AG.

The Brussels-based seller, which is focused on the central nervous system and immunology, said it will use the proceeds from the sale to reduce debt and to boost its drug pipeline.

"It's now the right time from a value perspective to focus on our core business and to offer Kremers Urban further growth opportunities with two strong organizations that are well-equipped to help Kremers Urban continue to grow," said UCB CEO Roch Doliveux in a statement.

Due to step down in January, Doliveux has been mentioned as a possible candidate to succeed Chris Viehbacher as CEO of France's Sanofi SA.

Bank Degroof analyst Bernard Hanssens said the deal assigns an enterprise value of 8.2 times Ebitda to Kremers compared with average multiples of 11 times over the past four years, and equates to a PE multiple of 12.8 times, based on fiscal 2014 earnings.

"It is logical that UCB focuses on its core business," Hanssens noted. "The reinvestment remains the key question."

UCB shares were down 3.8% in Brussels at €63.06, for a market capitalization of around €12.7 billion. The company has operations in about 40 countries with 2013 sales of €3.4 billion.

Kremers Urban makes difficult-to-manufacture and extended-release medicines requiring complex drug development technology and manufacturing processes. Its main product is Concerta, a prescription drug for the treatment of attention deficit hyperactivity disorder and attention deficit disorder, commonly referred to as ADHD and ADD, respectively, in adults and children.

UCB said it expects to close the deal in the first quarter of 2015.

Stephen Sands and Sven Pfeiffer led the Lazard team advising UCB, which took additionnal advice from BNP Paribas SA.

Covington & Burling LLP is acting as legal counsel to UCB.

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