IK Investment Partners will be tapping into the Belgium-Dutch pharmaceutical market as it plans to benefit from a cut in government funding for prescription drugs in the region.
The London-headquartered firm has agreed to acquire a 78.4 percent stake in Vemedia, a Belgium pharma company. The current chief executive Yvan Vindevogel, will re-invest together with IK, the firm said in a statement. IK also will make a cash offer for the remaining 21.6 percent stake, offering €2.80 per share.
The transaction value was undisclosed, but a source familiar with the situation told Private Equity International the 78.4% stake will be acquired for approximately €140 million.
Vemedia, which is headquartered in Kortrijk, sells over-the-counter medicines and pharmacy raw materials in Europe. Approximately 80 percent of its sales are in the Netherlands and Belgium, but it also generates sales in Italy, Spain and Portugal, the statement said. It specialises in sleeping pills, calming products and vitamins.
People are going to look for cheaper alternative medicines and these are often over-the-counter products
A subdued consumer spending climate in Europe and a recent value added tax rise in the Netherlands is not a concern, IK said. “It is a stable sector that has been growing in the last two years. Vemedia provides a wide range of products, not just sleeping pills, but everything you can buy over-the-counter at a chemist. Those products are generally not considered as large purchases. Consumers still buy these products when they need them,” Hilhorst added.
IK plans to strengthen Vemedia’s position in other selected over-the-counter categories. It will also explore geographic expansion to the UK, Germany and France. “It’s a very fragmented market. There are a lot of players and there are a lot of opportunities to expand through buy-and-build”, Hilhorst said. Due to increased regulation you start to see a defragmentation of the market, he added. “If you want to obtain licensing, certain investments are needed and this drives the consolidation of the market,” he said.
The transaction will be the last investment from IK’s €1.7 billion IK 2007 Fund. IK declined to comment on fundraising.
The acquisition agreement followed an auction process run by ING and Michel Dyens & Co. Bank Degroof acted as advisor to IK. The transaction is expected to be completed by the end of the year.