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Vivimed acquires Uquifa in €41 million deal

Vivimed Labs of India has acquired Uquifa from Yule Catto

INDIA-SPAIN

Vivimed Labs, an Indian speciality chemicals and pharmaceuticals firm that is best known for its activities in personal care, has acquired Uquifa, a bulk drug and intermediates maker with facilities in Spain and Mexico, from the UK-based holding company Yule Catto in a €41 million deal that will see some 390 of the 430 employees transfer.

The Hyderabad-based company said that this buy was "aimed at bringing strategic growth into its product mix and expand the footprint in Europe and America". Managing director Santosh Varalwar, who will also take over as president of Uquifa, added: "Multi-geographical locations spell stability and cement long-term relationship with customers and channel partners."

With Uquifa, he noted, "Vivimed will have a footprint into Latin America and deeper into Europe." Uquifa turns over about €75 million/year and has EBITDA margins of 15%, with a global business base. "The acquisition of Uquifa gives us a full pharma census as well as backward integration. We can also offer existing customers dosage forms for the regulated market."

The deal has been financed by a mixture of equity infusion (36.8%), debt financing (45.4%) and further payments deferred for three years (the remaining 17.8%). Vivimed expects it to be immediately accretive to earnings. After an 18-24 month integration process, said Varalwar, "we definitely see further improvements coming up. We are going to leverage our facilities in India to give a value-add because we would like to add more products to it".

Uquifa has moved from UK to Indian ownership

Vivimed's speciality chemicals segment supplies active ingredients to for personal care and industrial care products and chemicals for photo-imaging technology. Its main previous Western acquisition in this field had been James Robinson, a UK-based specialist in dyes and colour chemistry, in 2008.

The company also carries out contract manufacturing for various pharma products. In September 2011, it bought 60% of Octtantis Nobel Labs, an Indian maker of pharmaceutical and nutraceutical formulations while simultaneously raising €20.6 million from two private equity firms that helped to fund the Uquifa acquisition.

Founded as a national penicillin producer in 1936, Uquifa grew steadily down the years. As well as the two cGMP manufacturing sites near Barcelona and another at Cuernavaca in Mexico that was acquired from Smithkline Beecham, it has commercial offices in Barcelona, Chicago and Guangzhou. Another site in Italy was closed a few years ago.

Uquifa makes APIs and intermediates for pharmaceuticals and biotech firms from gram to multi-tonne scale. It sells to some 70 countries and has over 150 active DMFs, as well as a strong pipeline that Vivimed hopes will drive growth in pharmaceuticals in the coming years.

In the last 15 years, Uquifa has developed APIs in various therapies, notably anti-ulcer, anti-bacterial, anti-parasitic and anti-depressants like Omeprazole, Ranitidine, Ciprofloxacine and Fluoxetine. Key capabilities include enteric-coated pelletisation, freeze drying, hydrogenation, nitrations, ozonolysis and containment at levels of 0.1 µg/m³ for the manufacture of cytotoxics.

Uquifa had been part of Holliday Chemicals Holdings since 1991 and since 1998, has formned the Pharma Chemicals business of Yule Catto. Last year, it created a new venture based in Basel with generics producer Synthetics International "to deliver the combined benefits of Synthetics and Uquifa to the global custom synthesis and generic markets".

In 2010, Uquifa recovered from a weak Q1, but sales were down 3.7% from 2009 to €73.3 million, while profits fell by 24.4% to €5.2 million. It represented 10% of Yule Catto's group revenue and 7% of divisional operating profit making it slightly larger then the much-diminished Impact Chemicals, which comprises William Blythe in the UK, but much smaller and less profitable than Polymer Chemicals, which accounts for 85% of sales and 88% of profitability in 2010.

This division, which has been seen as the core business at Yule Catto for some time, makes water-based polymers for the surface coatings, constructions, adhesives, textile and paper industries. It operates via the Synthomer and Revertex subsidiaries, operating 14 facilities with 22 manufacturing plants across the globe and making about 800,000 tonnes of polymers/year.

In December 2010, Yule Catto acquired PolymerLatex for €438 million. It described this as "a transformational transaction for the Group, substantially increasing the scale and opportunities of our core Polymer business" that would yield synergies of some €23 million, strengthen the balance sheet and reward shareholders. It has since acquired Quality Polymer in a much smaller deal.

"This marks the final step in the long process of transforming Yule Catto into a substantial, highly-focused speciality polymer business," said CEO Adrian Whitfield, on announcing the sale of Uquifa. It may also make the company more attractive to buyers, including Dow, which was linked with a bid for Yule Catto over the summer.

 

 

From Online Issue: December 2011