AMCo

Activity
Niche speciality pharmaceuticals
Transaction value
£832 million
Acquired
Aug 2012 / Oct 2012
Sector
Healthcare

Cinven's investment in AMCo is a consequence of our Healthcare sector team's identification of an opportunity to consolidate the fragmented 'off-patent' pharmaceuticals market - an attractive niche that benefits from high barriers to entry and positive demographic drivers. The Healthcare team developed a relationship with two of the most attractive and complementary businesses in the sector, Mercury Pharma and Amdipharm. Cinven entered bilateral discussions with both businesses, culminating in two proprietary acquisitions during 2012.

In December 2012, Mercury Pharma and Amdipharm merged to create a single, consolidated, international pharmaceuticals company with pro forma revenues of around £250 million generated in 112 countries. The combined business was renamed AMCo.

The Businesses
Cinven acquired Mercury Pharma in August 2012 for an enterprise value of £465 million (c.€586 million). Mercury's highly experienced management team was led by John Beighton, CEO, who was subsequently appointed CEO of the combined entity.

Mercury was established in 1991 and markets niche off-patent prescription pharmaceuticals, principally in the UK and EU. Headquartered in Surrey, UK, Mercury was operational in the UK, Ireland and India. The company had strong revenue growth with annual sales of around £100 million.

In October 2012 Amdipharm, a family-owned international speciality pharmaceuticals business, was acquired for a total consideration of £367 million (c.€456 million). The founders retained a significant minority stake in the combined business at the time of Cinven's acquisition. Amdipharm was founded in Basildon, the UK, by Vijay and Bhikhu Patel in 2002. The company developed through a number of acquisitions and at the time of Cinven's acquisition generated revenues of more than £110 million.

The two highly complementary businesses benefited from improved scale and diversification (both geographically and on a product level). For example, Mercury's customer base was largely UK focused (c.80% UK sales), whereas Amdipharm had a significantly greater international business (c.70% non-UK sales), with its products sold in over 100 countries worldwide.

Strategy
Cinven's strategy has been based on continued buy and build, further internationalisation and applying best practice across both companies to accelerate growth and create value. During Cinven's investment period, AMCo has continued to grow its extensive and well diversified portfolio of affordable products, with additional growth from a strong pipeline of new products.

Progress
Following the acquisitions of Mercury Pharma and Amdipharm, Cinven worked with both management teams to merge the two businesses to create AMCo, a global business of significant scale. In December 2012 the businesses were successfully integrated with the combined entity benefiting from the sharing of best practices, cross selling, the targeting of underpenetrated markets and economies of scale.

Since the merger, AMCo has announced five significant acquisitions under Cinven's ownership including the purchase of the global rights to Fucithalmic® in March 2013, Abcur AB, a speciality pharmaceutical business in the Nordic region, in December 2013, Focus Pharmaceuticals in October 2014, Primegen in June 2015 and Boucher and Muir in July 2015.

In October 2015, Cinven completed the £2.3bn sale of AMCo to TSX/Nasdaq-listed Concordia Healthcare Corp, through a combination of cash, common shares of Concordia and a performance-based earnout. Following the sale of AMCo, Cinven will hold a minority shareholding in  Concordia Healthcare Corp.

The investment to-date has been a highly successful example of value creation through industry consolidation (including five value-accretive acquisitions during Cinven's investment period) as well as strong underlying organic growth, resulting in a doubling of the group's EBITDA.