Jubilant Organosys Ltd (Jubilant), a leading domestic player in the pharmaceutical custom research and manufacturing services (CRAMS) segment, has acquired 100 per cent stake in US-based contract injectable maker Hollister-Stier Laboratories LLC (Hollister) for $138.5 million.
Hollister, which posted an annual turnover of $55 million in 2006, has been posting 40 per cent compound annual growth rate (CAGR) over the last four years, and brings with it a stable and steady cash flow from its allergy extracts and products business, in which it has an established presence for the last 85 years.
"Hollister gives us a ready entry into contract manufacturing of injectables and presents a compelling business opportunity, especially in the US market. It also brings with it, high quality, steady cash flow allergy extracts and products business. Hollister is profitable and given its strong financials, the acquisition will augment our financial performance from day one," Shyam S Bhartia, chairman & managing director, and Hari S Bhartia, co-chairman & managing director, Jubilant, said.
According to R Sankaraiah, executive director-finance, Jubilant, the purchase price for the existing business was fixed at $122.5 million in cash, valued at 11.2 times FY 2006 normalised EBITDA.
In addition, Jubilant would reimburse capital expenditure incurred for the capacity expansion of $16 million through March 31, 2007, thereby, putting the cost of acquisition at $138.5 million. "Any further cash capital expenditure that is likely to be incurred for capacity expansion by Hollister until the date of closing the transaction will also be reimbursed," Sankaraiah added.
Hollister, located in Spokane, WA, USA, is a leading contract manufacturer of sterile injectable vials and lyophilization products and one of the world's top producers of allergenic extracts. It has selected manufacturing capabilities in lyophilization, vial filling, asceptic filling and allergenic extracts. The company has global branded, generic pharmaceutical and biotechnology companies as its customers.
Jubilant, which is to announce its annual results on April 27, 2007, had registered a 25.1 per cent growth in its nine-month net revenue ended December 2006. Jubilant scrips at BSE were at 253 points, down by 0.49 per cent, at close on April 24, 2007.
