Author: bpc

Oss, Netherlands – JSE Limited listed Aspen Holdings is pleased to announce that the Aspen Group (“Aspen”), the ninth largest generic pharmaceutical company in the world, has: signed an agreement with MSD (known as Merck in the United States and Canada) for the acquisition of an active pharmaceutical ingredient (“API”) manufacturing business which manufactures for MSD and the market generally and which is located in the Netherlands with a satellite facility and sales office in the US (“the API Business”); and reached an agreement on an option to acquire a portfolio of 11 branded finished dose form molecules (“the Products”) from MSD, covering a diverse range of therapeutic areas and including products that use APIs manufactured by the API Business. (collectively “the Transaction”) Stephen Saad, Aspen Group Chief Executive, said “One of Aspen’s primary strategic intents is to further globalise its business, increase its representation across a number of additional territories and provide support to its growing global presence with a differentiated pipeline. This Transaction provides a platform to contribute to the achievement of this strategic intent by enabling Aspen to access a niche range of APIs and finished dosage products.” The Transaction, which is subject to conditions precedent, is valued at approximately US$1 billion (ZAR10.06 billion at ZAR10.06/US$) and comprises the following elements: In respect of the API business: Aspen Holdings will acquire the shares of a new Dutch company (“Dutch Newco”) containing the API Business for a consideration of approximately €36 million (ZAR472 million at ZAR13.11/€); and Dutch Newco will simultaneously acquire inventory with an expected value of approximately €300 million (ZAR3.9 billion at ZAR13.11/€). In respect of the Products: Aspen Global Incorporated, a wholly owned subsidiary of Aspen Holdings, has the option to acquire the Products by way of the exercise of a call option with a resulting asset purchase for a consideration of US$600 million. The effective date of the API Business acquisition is expected to be 1 October 2013 while the expected effective date of the Products acquisition through the exercise of the option is 31 December 2013. Funding: The Transaction, other than certain deferred payments for the MSD inventory and the Products, will be funded from new debt facilities which are at an advanced stage of negotiation. It is planned to fund the deferred payments from Aspen’s existing cash at the time payment is due. The API Business: The API Business consists of manufacturing operations within existing MSD sites comprised as follows: In Oss, the Netherlands, parts of the Moleneind and De Geer sites as well as the entire Boxtel site; and Sioux City, Iowa, in the US. The business also has sales offices at the Oss site in the Netherlands and in Des Plaines, Illinois, in the US. The products manufactured at the sites fall into two categories, namely biochemicals, where biological processes are involved, and chemicals where the process is fully synthetic. The API Business recorded pro-forma revenue of €284 million in the year ended 31 December 2012. The Products: The Products comprise a portfolio of 11 branded finished dosage form molecules, covering a diverse range of therapeutic treatments. The main brands being acquired, by therapeutic area, are: Therapeutic Category Brands Hormone replacement therapy Ovestin, Sustanon, Metrigen Anti-Coagulant Oragan Cortico-Steroid Decadron, Oradexon, Metricorten, Meticortelone Anabolic steroid Deca Durabolin Hyperthyroidism Thyrax, Strumazol Oral Contraceptives Gracial, Novial Vitamin B Complex Benutrex MSD reports that the products which are the subject of the transactions recorded revenue of US$ 248 million in its financial year ended 31 December 2012. More than half of this revenue was generated in Aspen’s key strategic regions of Latin America and Asia Pacific with Europe being the other large territory. The Products will be initially manufactured under the pre-existing MSD manufacturing arrangements in terms of a medium term supply agreement between Aspen Global Incorporated and MSD. Rationale: The following considerations support the rationale for the Transaction: The API Business manufactures heparin, the API used in the manufacture of Fraxiparine, one of the products for which Aspen has made an offer to GSK (refer to Aspen’s cautionary announcement of 18 June 2013); The API Business manufactures the APIs used in a number of the products Aspen will be acquiring under the Transaction, allowing for effective vertical integration; MSD will continue to acquire APIs from Aspen under a 10-year supply contract which will provide significant on-going volumes for the API Business; Aspen plans to improve the cost competitiveness of the APIs; There are opportunities for Aspen to develop finished dosage form products from certain of the APIs such as hormones and peptides; The Products will complement Aspen’s existing portfolio and will provide critical mass to the Aspen offering in a number of markets. This will allow for additional promotional impetus to Aspen’s portfolio of global brands; and These niche Products will substantially supplement Aspen’s growing footprint in a number of emerging and established markets – the notable presence of these products in Latin America and Asia Pacific is supportive of Aspen’s aspirations for these regions.

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.