Warburg cashes out of Czech pharma business

The global investor has generated around $1.2bn in total from its investment in pharmaceutical group Zentiva, which it acquired in 1998.

Global private equity firm Warburg Pincus has sold a 19.634 percent stake in Prague-based pharmaceutical company Zentiva to trade buyer Sanofi-Aventis Group.
The transaction saw Sanofi-Aventis acquire Warburg Pincus’ entire stake in Zentiva, as well as a 4.5 percent stake from Zentiva management and employees, in a €430 million ($517 million) deal.
Warburg Pincus originally teamed up with management in May 1998, investing $125 million to support a buyout of the 67 percent of Zentiva owned by the Czech government and to fund subsequent tender offers for remaining shares held by public shareholders.

Warburg Pincus had already carried out two share placings last year, selling 2.4 million of shares and 10.7 million of shares in May and September last year.
Warburg Pincus is understood to have received $1.2 billion (€998 million) for its stake in Zentiva, generating a money multiple of 9x its original investment. The firm was not immediately available for comment.
Management continue to hold a 6.5 percent stake in Zentiva, while the remainder of the shares are held by other institutional and private investors.
According to Warburg Pincus, Zentiva has improved its gross margins and increased profitability under its ownership. In September 2003, Zentiva acquired Sovakofarma, the second-largest pharmaceutical company in the Czech Republic and Slovakia. Last October, Greek private equity firm Global Finance and GED Capital Development, part of Madrid-based GED Private Equity Group, sold their joint 51 percent stake in Romanian pharmaceutical business Sicomed to Zentiva in a €161 million deal.
Zentiva is a developer, manufacturer and marketer of branded generic pharmaceutical products with a particular focus on cardiovascular disorders, inflammatory conditions, pain, infections and diseases of the central nervous system and the gastrointestinal and urology fields. The company has a strong presence in the Czech Republic, Slovakia and Romania and is increasing its market share in Poland, Russia and the Baltic States.
Zentiva employs over 4,200 people and has production sites in the Czech Republic, Slovakia and Romania.