Sun, 12 Jul 2020

Pharmaceutical group Aspen [JSE: APN] said its Mauritius-based subsidiary has sold its Japanese operations to Sandoz in a €400m (R6.6bn) deal.

Sandoz, a division of the Swiss pharmaceutical group Novartis, is a maker of generic medicines headquartered in Germany. The company said the terms of the transaction include intellectual property and any related interests transfer of all Aspen Global Incorporated shares in Aspen Japan to Sandoz.

The proceeds from the transaction will be used to reduce debt. Aspen is selling some of its assets as it battles a debt burden of around R40bn. Earlier this year, a deal to sell its infant milk business helped reduce that burden from R53bn - which was more than its market value - earlier.

Aspen's share price was up more than 2% in early trading on Monday morning - but remains down 71% from heights reached five years ago as investors fret about its debt burden.

The net asset value of the Japanese operations was approximately R4.8bn as at 30 June 2019, the company said.

Aspen's Japanese operations contributed R2.1bn in revenue and R0.4bn in Earnings before interest, tax, depreciation and amortization (EBITDA) to the group for the year ended 30 June 2019.

"The transaction is consistent with the group's strategic intent to focus on its core pharmaceuticals business in markets where it has sufficient scale and where there is alignment between its business model and the relevant market dynamics," the company said."While Aspen's current portfolio and operational platform in Japan do not provide sufficient scale and leverage in this market, it is believed that this business' current strong management, dedicated staff, specialty portfolio and commercial platform will present an excellent opportunity once combined with Sandoz's Japanese portfolio and product pipeline."

The deal is subject to competition approval by the Japan Fair Trade Commission and is expected to complete to be concluded in the first half of calendar year 2020.

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