Aspen to invest more than R1,9 billion in infant nutritional deal with Pfizer

18/04/13:

Shareholders of Aspen Holdings are advised that Aspen Group companies (“Aspen”) have concluded agreements with Nestlé S.A. in respect of the acquisition of certain rights to intellectual property licenses, net assets and shares in the IN businesses presently conducted by Pfizer which distribute a portfolio of IN products in Australia (the “Australian IN business”) and certain Southern African territories (South Africa, Botswana, Namibia, Lesotho, Swaziland and Zambia)(the “Southern African IN business”) for a total purchase consideration of USD 215 million. The IN portfolio covers all age stages (infants, toddlers and early childhood) and consists of premium, specialty and standard ranges supported by strong umbrella brands including S26 Gold®, S26® and SMA®. The revenue for the Australian and Southern African IN businesses amounted to AUD 83 million and ZAR 180 million respectively in 2012.

Stephen Saad, Aspen Group Chief Executive said, “These transactıons support Aspen’s stated ambıtıons to extend our ınfant nutrıtıonal busıness. We understand the potentıal of these products as we are famılıar wıth the brands havıng marketed these ın South Afrıca under lıcense ın the recent past.”

The Australian competition authorities have approved Aspen’s acquisition of the Australian IN business and the transaction will be effective in Australia from 28 April 2013. The South African and Namibian competition authorities’ approval of the acquisition of the Southern African IN business is pending.

The nature of the transaction and the assets relating thereto are set out below:

  • Aspen will have the exclusive right of use of the Nestlé (previously Pfizer) S26® and SMA® IN product trademarks for a period of 10 years (“licensed products”) in Australia and Southern Africa;
  • Aspen will also have the right to co-brand the licensed products over the initial 10 year period and to transition these products to Aspen branded products over this period;
  • For a further 10 year period, commencing after expiration of the initial 10 year exclusive licence period, Nestlé will be precluded from commercialising the licensed products (so-called “10 year black out period”), effectively providing Aspen with a 20 year period to establish equivalent Aspen branded IN products;
  • Aspen will have a perpetual licence to the IN technology, technical know-how and formulations existing at the effective date plus access to an agreed licensed product pipeline together with related technology developments for a period of 5 years from the effective date;
  • There will be a transfer of the ownership in the operating businesses from Nestlé to Aspen and this will include the transfer of the employees within those businesses; and
  • Aspen will be provided with transitional service arrangements by Nestlé and Pfizer including the manufacture and supply of licensed products under a non-exclusive arrangement. These arrangements will provide Aspen with the flexibility to transition the manufacture of IN products to its own sources of supply including to its own IN manufacturing facilities within a 3 year period.

The transaction presents a good commercial and strategic fit for Aspen, given its heritage with these brands and its strength in the IN market in South Africa coupled with its local manufacturing capabilities. In Australia the transaction will synergistically augment Aspen’s strong presence in the grocery and over-the-counter market segments. The transaction will provide Aspen with an enhanced platform from which to extend the global footprint of it’s IN business in the medium term.