KV sells unit in $24.6m deal
Under the terms of the deal, a private equity group led by Edgewater Capital Partners (ECP) paid an initial purchase price of $24.6m, for Particle Dynamics Incorporated (PDI). The company develops and markets specialty raw materials used as ingredients in the pharmaceutical industry and other markets.
The agreement also includes an additional $5.5m in potential earn-out payments over the next four years.
“ECP began reviewing the PDI opportunity after receiving some preliminary information from its deal flow network,” said Ryan Meany, partner at ECP.
The fresh injection of cash provides St Louis based KV with some relief from its troubles stretching back to January 2009. The firm's production plants have been forced to cease manufacturing due to production deficiencies following investigations by the US Food and Drug Administration (FDA).
Prospects for PDI
Despite its troubles PDI has been able to hang on to its certifications for current good manufacturing practice (cGMP) from the FDA and European Union (EU) regulatory bodies.
Paul Brady, KV's vice president of corporate development and president of Particle Dynamics told the St Louis Post Dispatch last week there was, ‘a great opportunity here to grow the business. Suppliers like PDI are becoming even more important because of our exemplary record of good manufacturing.’
“Branded OTC companies will rely more on companies like PDI who have the track record of full compliance from a regulatory perspective,” Meany added.
He said that ECP had not ruled out the possibility of strengthening PDI’s manufacturing capabilities saying that the private equity investment firm would be opportunistic in its review of add-on acquisitions for PDI.
Cutbacks at KV
In an attempt to reduce KV’s cash burn for the first quarter of this year, March saw the firm lay off 289 employees, representing 42 per cent of its workforce. From a workforce that used to total 1,700 workers, KV now retain staff that total less than 400.
Its troubles continued with events that occurred in the same month of last year. Here, KV Pharmaceuticals’ Ethex subsidiary, recalled batches of five generic drugs that were deemed to contain an excessive amount of active pharmaceutical ingredient (API).
The drugs: propafenone HCl; isosorbride mononitrate ER; morphine sulphate ER; morphine sulphate IR; and dextroamphetamine sulphate, formed part of a number of faulty batches that resulted in oversized tablets being withdrawn from pharmacy shelves in the US.
