Aspen’s eye on debt as baby-milk deal set for approval by month end

JOHANNESBURG — Growth by acquisition has come under the microscope recently, as companies, like consumers, find that borrowing is a much easier experience than paying back. Steinhoff has been the big headline grabber, with Markus Jooste and his group of eight, taking the company from a sourcing and manufacturing business in Stellenbosch to a global retail business, with the acquisitions of Conforama and Mattress Firm. It’s all went belly up as each new acquisition had to be bigger than the last. And while Aspen has no Bernie Madoff type ’17th-floor’ operation, it still fell into this web of growth by acquisition. Aspen’s debt commitments have hence been piling up and are set to mature, which has seen the stock fall over 60% since August last year. In a bid to clear it up the pharma group has entered into an agreement to sell its milk formula business. The group is also expected to exit other businesses but the disposal of the French dairy company Lactalis is expected by month end. – Stuart Lowman

Aspen is said to get approvals for baby-milk deal in weeks

By Loni Prinsloo and Manuel Baigorri

(Bloomberg) – Aspen Pharmacare Holdings Ltd. is expected to receive final approvals to complete the sale of its milk-formula business within weeks, according to people familiar with the matter, after delays to the deal wiped out more than 30% of the South African drugmaker’s market value.

New Zealand authorities have indicated that the disposal to French dairy company Lactalis International could be approved this month, said the people, who asked not to be identified because negotiations are private. As part of finalising the deal, the division will then be restocked, the people said.

The €740m ($830m) transaction is central to helping Aspen slash a growing debt pile that’s been worrying investors. Africa’s largest drugmaker said last month that closure on the deal had been pushed out to the end of May from the end of December, triggering the stock’s biggest one-day slump in almost 21 years.

The shares rose 5.4% to R97.60 as of 1:43pm in Johannesburg, valuing Aspen at R44bn ($3.1bn). The stock is still down 31% since the most recent delay to the sale was announced March 8.

Aspen’s borrowings include a €1bn loan that matures in May 2020 and a €500m facility due May 2022, according to data compiled by Bloomberg. The South African company has said it will look to exit some of its other non-core European businesses, to focus on selling hormones, anaesthetics and anti-retrovirals in emerging economies.

While the New Zealand regulator has received an application in relation to Lactalis’ acquisition of Aspen’s nutritional business, it’s unable to give a date for its decision, a spokeswoman said in an emailed response to questions. Aspen and Lactalis declined to comment.

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