Last checked at 18 Aug 2009 18:35
| For immediate release | 18 August 2009 |
ALLIANCE PHARMA PLC
("Alliance" or "the Company")
Acquisition of Buccastem® and Timodine® brands and vendor share placing
Alliance Pharma plc (AIM: APH), the speciality pharmaceutical company, announces that its wholly-owned subsidiary, Alliance Pharmaceuticals Limited ("APL"), has conditionally agreed to buy the worldwide rights to the Buccastem® and Timodine® brands from various subsidiaries of Reckitt Benckiser Group plc ("Reckitt Benckiser") for a total consideration of £7.5m (the "Acquisition").
Buccastem® is sold mainly on prescription as a treatment for nausea and vomiting, and for symptomatic treatment of other conditions such as vertigo. It is also available over-the-counter, as Buccastem® M, for use by migraine sufferers. It comes in a special buccal tablet formulation which adheres to the gum and releases the drug over one to two hours. This has a particular advantage as vomiting patients may encounter difficulties taking tablets orally. Production of Buccastem® will remain with the existing contract manufacturer following the Acquisition.
Timodine® is a broad spectrum anti-fungal and anti-bacterial skin cream used for treating inflamed and infected skin conditions in which the Candida albicans fungus is a factor. Uses of Timodine® include treatment of severe nappy rash, eczema and other dermatoses. In the United Kingdom, Timodine® is available only on prescription. Reckitt Benckiser will continue to manufacture Timodine® for Alliance for at least two years while production is moved to a third party contract manufacturer. It is anticipated that subsequent to the Acquisition, some outstanding variations to the Timodine® product licence in respect of the formulation of Timodine® will need to be submitted to the regulatory authority. This may or may not result in the interruption of the distribution of Timodine® whilst these variations are processed. If there were such an interruption, Reckitt Benckiser Healthcare (UK) Limited has agreed to compensate Alliance for up to £0.25m of gross margin lost as a result of such interruption.
In the year ended 31 December 2008, total sales of the two brands were £2.6m (of which £1.6m were sales of Buccastem® and £1.0m were sales of Timodine®) and the total gross margin of the two brands was £2.2m. The majority of the sales of both brands were within the United Kingdom. The Acquisition is expected to be significantly earnings enhancing in the first full year of ownership by Alliance.
The consideration for the Acquisition of £7.5m is to be satisfied as to £3.8m in cash and as to £3.7m by way of a vendor share placing by the Company (the "Vendor Placing"). The Company has conditionally raised a further £0.2m by way of a cash placing to be applied by the Company to settle the costs and expenses in relation to the Vendor Placing and the Acquisition (together with the Vendor Placing, the "Placing"). In total, 31,200,000 new ordinary shares of 1 pence each in the capital of Alliance ("Placing Shares") have been placed with certain existing and new UK investors by Numis Securities Limited ("Numis") at a placing price of 12.5 pence per share (the "Placing Price").
To fund the cash element of the Acquisition, Lloyds Banking Group is providing an additional £2m term loan and increasing the existing £3m working capital facility to £5m.
The Acquisition and the Placing are conditional upon, inter alia, the placing agreement between the Company and Numis becoming unconditional and not being terminated and the admission of the Placing Shares to AIM ("Admission"). Application has been made for the 31,200,000 Placing Shares to be admitted to AIM and it is expected that dealings in the shares will commence on 24 August 2009. Upon Admission, the Placing Shares will rank pari passu in all respects with the existing Ordinary Shares in issue. Following Admission, the total number of Ordinary Shares in the Company with voting rights in issue will be 193,261,773.
In a trading update issued on 7 July 2009, Alliance announced that the Group's profit before tax for the six months ended 30 June 2009 was expected to be not less than £2.7m. Operating profit for the same period was approximately £4.1m, up 46% on the same period in 2008, and the net bank debt at 30 June 2009 was £23.1m, a reduction of £2.1m since 31 December 2008. The Company is proposing to declare a maiden interim dividend in September 2009, to be paid in January 2010. Further details will be provided in the interim results scheduled for 9 September 2009.
Commenting on the acquisition, John Dawson, CEO of Alliance said:
"We are delighted to bring a further two well-established and profitable prescription brands into our portfolio, thereby extending our successful business model. Timodine® will fit well with our existing Dermatology brands, an area that we are actively promoting, and both brands bring the potential to extend our international business."
Director shareholdings
Following Admission of the Placing Shares, the share interests of the Directors and their families will be as follows:
| Director | Number of Ordinary Shares held before the Placing | Percentage shareholding before the Placing | Number of Ordinary Shares held following Admission | Percentage shareholding following Admission |
| John Dawson | 62,261,402 | 38.42% | 62,261,402 | 32.22% |
| Anthony Booley | 6,810,723 | 4.20% | 6,810,723 | 3.52% |
| Michael Gatenby | 350,000 | 0.22% | 350,000 | 0.18% |
| Andrew Smith | 200,000 | 0.12% | 200,000 | 0.10% |
| Richard Wright | 190,768 | 0.12% | 190,768 | 0.10% |
| Paul Ranson | 48,000 | 0.03% | 48,000 | 0.02% |
| Thomas Casdagli * | 15,000,000 | 9.26% | 17,400,000 | 9.00% |
* Mr Casdagli is a partner of MVM Life Science Partners LLP ("MVM"). As part of the Placing, MVM subscribed for 2,400,000 Placing Shares at the Placing Price.
For further information:
| Alliance Pharma plc | + 44 (0) 1249 466966 |
| John Dawson, Chief Executive | |
| Richard Wright, Finance Director | |
| www.alliancepharma.co.uk | |
| | |
| Buchanan Communications | + 44 (0) 20 7466 5000 |
| Mark Court / Rebecca Skye Dietrich / Stasa Filiplic | |
| | |
| Numis Securities Limited | + 44 (0) 20 7260 1000 |
| Nominated Adviser: Michael Meade / Brent Nabbs | |
| Corporate Broking: David Poutney | |
Notes to editors:
About Alliance
Alliance, founded in 1998, is an AIM listed speciality pharmaceutical company based in Chippenham, Wiltshire, UK. The Company has a strong track record of acquiring the rights to established niche brands and owns, or licenses, the rights to 35 branded pharmaceutical products and continues to explore opportunities to expand the range.
Alliance's products are prescribed in the treatment of a wide range of conditions and include brands used in the treatment of dermatological conditions, in childbirth, in the prevention of heart disease, in Parkinson's disease, in nutrition and in nasal infections. Alliance's sales are mainly prescription driven. Its products are distributed to hospitals directly and to pharmaceutical wholesalers, which service both hospital and retail pharmacies with their prescription requirements.
Alliance joined the AIM market of the London Stock Exchange in December 2003 and trades under the symbol APH.
Numis Securities Limited, which is authorised and regulated by the Financial Services Authority, is acting for Alliance Pharma plc and for no-one else in connection with the contents of this announcement and will not be responsible to anyone other than Alliance Pharma plc for providing the protections afforded to clients of Numis Securities Limited, or for providing advice in relation to the contents of this announcement or any matters referred to herein.