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Alliance Pharma's US$11.5mln acquisition will be immediately earnings enhancing

Alliance Pharma has added to its medicine cabinet with the US$11.5mln deal to acquire full ownership of obstetric drug Syntometrine from Swiss giant Novartis. Funded via a mix of internally generated cash and debt from the firm’s acquisition facility, the transaction will be immediately earning enhancing.

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Alliance Pharma (LON:APH) has added to its medicine cabinet with the US$11.5mln deal to acquire full ownership of obstetric drug Syntometrine from Swiss giant Novartis.

Funded via a mix of internally generated cash and debt from the firm’s acquisition facility, the transaction will be immediately earnings enhancing.

The speciality pharma group already owns the UK rights to the treatment, which is used in the final stages of labour.

However, Syntometrine sells in a number of other major territories, including Australia, South Africa, Malaysia and New Zealand.

Total sales in the year to March 31 were US$3.2mln and the gross margin was US$2.8mln.

Chief executive John Dawson said: "We are delighted to acquire these significant overseas rights to Syntometrine, a product we already know well through selling it in the UK for many years.

“Although there will be some costs of operating the new distributorships, the acquisition will be immediately earnings enhancing and it fits well with our strategy of increasing Alliance's international sales."

The shares, up a fifth in the past six months, gained a further 2% by midday and were changing hands for 37.4 pence each.

“Today’s corporate news is in keeping with Alliance's strategy of complementing steady 3-5% organic growth with bolt-on deals of long established drugs,” said Sahill Shan, of broker N+1 Singer. 

“The deal is perhaps not the move we expected to establish a firm presence in Europe (per stated strategy), but nevertheless it helps further diversify the sales away from the UK and very usefully accretive to the bottom line."

Quick facts: Alliance Pharma PLC

Price: 63.7 GBX

AIM:APH
Market: AIM
Market Cap: £337.58 m
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