OREANDA-NEWS. Aspen Holdings is pleased to announce that its wholly owned subsidiary, Aspen Global Incorporated (“AGI”), has signed an agreement with AstraZeneca AB and AstraZeneca UK (“AstraZeneca”) whereby AGI will acquire the exclusive rights to commercialise AstraZeneca’s global (excluding the USA) anaesthetics portfolio (“the Transaction”).

AstraZeneca’s anaesthetics portfolio comprises seven established medicines, namely Diprivan (general anaesthesia), EMLA (topical anaesthetic) and five local anaesthetics (Xylocaine/Xylocard/Xyloproct, Marcaine, Naropin, Carbocaine and Citanest) (“the Portfolio”). The products in the Portfolio are sold in more than one hundred countries worldwide including China, Japan, Australia and Brazil. These products generated revenue of US$ 592 million in the year ended 31 December 2015.

The Transaction

In terms of the concluded agreement, as consideration for the commercialisation rights, AGI will pay US$520 million and double-digit percentage royalties on sales of the Portfolio. Additionally AGI will make sales related payments of up to US$250 million based on sales in the 24 months following completion. AGI and AstraZeneca have also signed a supply agreement whereby AstraZeneca will supply the anaesthetic products to AGI. This supply agreement has an initial period of 10 years.

The commercial activities will transition to AGI in the short to medium term in accordance with an agreed plan. During the transition period AstraZeneca will continue to provide certain commercialisation services to AGI.

Based on the terms of the agreements and Aspen’s current cost of funding, Aspen’s interest in the Portfolio would have generated a contribution to profit before tax of approximately US$100 million in the year ended 31 December 2015.

Funding

AGI’s upfront investment will be funded from new debt facilities which have been secured.

Rationale

A key element of AGI’s inorganic expansion strategy is to acquire products within therapeutic areas that are both niche in nature and complementary to its existing operations. To this end, AGI has identified anaesthetics as a therapeutic category that presents the opportunity to add significant value to the Aspen Group. As a category of pharmaceuticals that primarily involves sterile manufacturing and that is dispensed largely in hospitals and clinics, anaesthetics present an opportunity to leverage both Aspen’s existing hospital focused sales force that is currently promoting anti-coagulants and, potentially in due course, sterile manufacturing capabilities. Furthermore, the key territories in which the Portfolio is sold represent an excellent fit with Aspen’s existing operational geographic footprint and those markets on which its future strategy is focussed.

By entering into the Transaction, Aspen gains immediate access not only to a global portfolio of exceptionally strong brands but also to the scientific and strategic expertise of AstraZeneca, one of the world’s major pharmaceutical companies and a leader in the area of anaesthetics.

Completion

The transaction is subject to customary closing conditions and is anticipated to complete during the first quarter of Aspen’s 2017 financial year.

Categorisation of the Transaction

The Transaction is categorised as a Category 2 transaction in terms of the JSE Limited Listings Requirements.

Durban, 9 June 2016

Sponsor: Investec Bank Limited