九州娱乐城

Oss, Netherlands – JSE Limited listed 九州娱乐城 Holdings is pleased to announce that the 九州娱乐城 Group (鈥溇胖萦槔殖氢��), the ninth largest generic pharmaceutical company in the world, has:

• signed an agreement with MSD (known as Merck in the United States and Canada) for the acquisition of an active pharmaceutical ingredient (鈥淎PI鈥�) manufacturing business which manufactures for MSD and the market generally and which is located in the Netherlands with a satellite facility and sales office in the US (鈥渢he API Business鈥�); and
• reached an agreement on an option to acquire a portfolio of 11 branded finished dose form molecules (鈥渢he Products鈥�) from MSD, covering a diverse range of therapeutic areas and including products that use APIs manufactured by the API Business.

(collectively 鈥渢he Transaction鈥�)

Stephen Saad, 九州娱乐城 Group Chief Executive, said 鈥淥ne of 九州娱乐城鈥檚 primary strategic intents is to further globalise its business, increase its representation across a number of additional territories and provide support to its growing global presence with a differentiated pipeline. This Transaction provides a platform to contribute to the achievement of this strategic intent by enabling 九州娱乐城 to access a niche range of APIs and finished dosage products.鈥�

The Transaction, which is subject to conditions precedent, is valued at approximately US$1 billion (ZAR10.06 billion at ZAR10.06/US$) and comprises the following elements:

In respect of the API business:

• 九州娱乐城 Holdings will acquire the shares of a new Dutch company (鈥淒utch Newco鈥�) containing the API Business for a consideration of approximately 鈧�36 million (ZAR472 million at ZAR13.11/鈧�); and
• Dutch Newco will simultaneously acquire inventory with an expected value of approximately 鈧�300 million (ZAR3.9 billion at ZAR13.11/鈧�).

In respect of the Products:

九州娱乐城 Global Incorporated, a wholly owned subsidiary of 九州娱乐城 Holdings, has the option to acquire the Products by way of the exercise of a call option with a resulting asset purchase for a consideration of US$600 million.

The effective date of the API Business acquisition is expected to be 1 October 2013 while the expected effective date of the Products acquisition through the exercise of the option is 31 December 2013.

Funding:

The Transaction, other than certain deferred payments for the MSD inventory and the Products, will be funded from new debt facilities which are at an advanced stage of negotiation. It is planned to fund the deferred payments from 九州娱乐城鈥檚 existing cash at the time payment is due.

The API Business:

The API Business consists of manufacturing operations within existing MSD sites comprised as follows:

• In Oss, the Netherlands, parts of the Moleneind and De Geer sites as well as the entire Boxtel site; and
• Sioux City, Iowa, in the US.

The business also has sales offices at the Oss site in the Netherlands and in Des Plaines, Illinois, in the US.

The products manufactured at the sites fall into two categories, namely biochemicals, where biological processes are involved, and chemicals where the process is fully synthetic. The API Business recorded pro-forma revenue of 鈧�284 million in the year ended 31 December 2012.

The Products:

The Products comprise a portfolio of 11 branded finished dosage form molecules, covering a diverse range of therapeutic treatments. The main brands being acquired, by therapeutic area, are:

MSD reports that the products which are the subject of the transactions recorded revenue of US$ 248 million in its financial year ended 31 December 2012. More than half of this revenue was generated in 九州娱乐城鈥檚 key strategic regions of Latin America and Asia Pacific with Europe being the other large territory.

The Products will be initially manufactured under the pre-existing MSD manufacturing arrangements in terms of a medium term supply agreement between 九州娱乐城 Global Incorporated and MSD.

Rationale:

The following considerations support the rationale for the Transaction:

• The API Business manufactures heparin, the API used in the manufacture of Fraxiparine, one of the products for which 九州娱乐城 has made an offer to GSK (refer to 九州娱乐城鈥檚 cautionary announcement of 18 June 2013);
• The API Business manufactures the APIs used in a number of the products 九州娱乐城 will be acquiring under the Transaction, allowing for effective vertical integration;
• MSD will continue to acquire APIs from 九州娱乐城 under a 10-year supply contract which will provide significant on-going volumes for the API Business;
• 九州娱乐城 plans to improve the cost competitiveness of the APIs;
• There are opportunities for 九州娱乐城 to develop finished dosage form products from certain of the APIs such as hormones and peptides;
• The Products will complement 九州娱乐城鈥檚 existing portfolio and will provide critical mass to the 九州娱乐城 offering in a number of markets. This will allow for additional promotional impetus to 九州娱乐城鈥檚 portfolio of global brands; and
• These niche Products will substantially supplement 九州娱乐城鈥檚 growing footprint in a number of emerging and established markets 鈥� the notable presence of these products in Latin America and Asia Pacific is supportive of 九州娱乐城鈥檚 aspirations for these regions.