Mayne sets itself up in Europe with acquisition
market with the acquisition of a Germany company specialising in
the manufacture of freeze dried and solution vial products for
contract customers.
Mayne has bought Wasserburger Arzneimittelwerk Dr Madaus, part of the Madaus group based in Cologne, Germany, to complement its own Mayne Pharma (US) injectables business. It gives the company manufacturing facilities in its three prime markets - Europe, the Americas, and Asia-Pacific.
The acquisition is valued at approximately €25 million, and Mayne will assume €15 million in debt related to Wasserburger's manufacturing facility.
Mayne's chief executive, Stuart James, said that the acquisition "is another building block in Mayne's international growth strategy by providing an alternative source of manufacturing capacity at a price that could not have been achieved if Mayne had decided to build its own equivalent facility."
He added that building a unit from scratch would have almost doubled the cost and taken two to three years for validation and to be ready for commercial production. "Unlike a greenfield opportunity, this facility is earnings positive on day one," he noted.
The additional manufacturing operations complement the $60 million (€51m) investment being made in Mayne's other production sites at Mulgrave, Australia and Aguadilla, Puerto Rico that were announced last December.
James said that Wasserburger will generate incremental EBITA earnings of €2 million in 2005 growing to €8 million in fiscal 2007 leading to returns on investment of approximately 13 per cent in that year.
In addition, a local manufacturing facility will help Mayne's European business manage its production, transport and inventory, he said.
In August, a major facilities expansion at Wasserburger should be completed which effectively doubles its capacity.
Wasserburger currently contract manufactures injectable, pharmaceutical products for approximately 30 customers and has the ability to produce high-volumes of key freeze dried products that are capacity constrained at the facility in Mulgrave, according to Mayne.
In relation to the debt assumed in the transaction, one of Wasserburger's customers contributed approximately €10 million to support the majority of the facilities expansion. As part of a five-year manufacturing agreement that guarantees a minimum level of production through the plant, some of revenues generated from this customer will be set off against the loan.
