Deal in Focus: Astorg sells Ethypharm after nine-year holding
France Deals Pharma, Medical & Biotech

Deal in Focus: Astorg sells Ethypharm after nine-year holding

Despite being approached by interested parties since late 2014, Astorg Partners remained firm on its longer-term investment strategy, exiting French pharmaceutical group Ethypharm after nine years. Alice Tchernookova reports

Earlier this month, Astorg sold French drug maker Ethypharm to PAI Partners in a €725m deal, having been invested in the company for nine years. The longer-than-average holding period was a result of Astorg's clear investment strategy for the company, despite several approaches from interested parties.

"As early as the end of 2014, we were approached by strategic actors on the market," says Astorg managing partner Thierry Timsit. "We told them we weren't ready yet as there were still steps we had to take in order to fully implement our strategy."

A key focus for the GP was to support further bolt-on acquisitions for Ethypharm. In December 2013, the company acquired French group Dexo in its entirety, bringing its turnover to €10m. Other investments around the same time included British company Trotwood Pharma, which targets niche medicines.

In September 2015, Astorg made a final addition to Ethypharm's portfolio with the acquisition of UK firm DB Ashbourne. The deal was valued at €287.5m, including a refinancing of the group's debt facilities. A financing package was provided by Goldman Sachs, JP Morgan and Mizuho, which jointly underwrote a €252.5m term loan B facility, together with working capital and capital expenditure facilities of €35m.

Opiates focus

When Astorg entered the company in 2007, Ethypharm offered a choice of around 120 generic drugs. The GP's strategy initially focused on trimming down its array of products, refining its portfolio to around 10 core products in the painkiller or anti-addictive range, also known as opiates.

Ethypharm's R&D operations were also boosted, resulting in 40% of the drugs produced by the company now being classified as innovative.

On the management side, Astorg replaced five of the seven executive board members in place upon arrival. The China-based management team was fully replaced too, enabling a full revision of the company's business model in that region.

After the acquisition and refinancing of DB Ashbourne, we felt it was the right time for us to leave" – Thierry Timsit, Astorg Partners

Other restructuring operations included the closure of the group's Canadian subsidiary and of one of its three French factories, allowing one of the two remaining ones to double its size.

Following the reshuffle, the group's expansion to the UK, French and German markets contributed to Ethypharm's increasing attractiveness within the pharmaceuticals sector, inciting interested bids from international players. "After the acquisition and refinancing of DB Ashbourne, we felt it was the right time for us to leave," Timsit says. "We had brought Ethypharm where we wanted and had demonstrated what we wanted to. The company's €60m EBITDA accounted for its success."

PAI's prize

Astorg officially announced Ethypharm was up for sale at JP Morgan's 34th Annual Healthcare Conference in January this year. The invitation to tender made by Rothschild, who led the auction, received between 10-12 letters of intent in response.

Bidders that made it into the first round included Bain Capital, European firm Mundipharma, China's Luye Pharma and Fosun Pharmaceuticals, US-based Adare Pharmaceuticals and, of course, PAI.

While Luye and PAI were frontrunners in the process until the final stages, PAI's rapidity of action, and the simplicity of the contract put forward for the acquisition, helped Astorg in making its decision. "We preferred to choose security over money, and the terms offered by PAI in terms of financing appeared to be more secure," says Timsit.

Following the deal, Astorg will continue to invest in the pharmaceutical industry. Its recent acquisitions include HRA Pharma, which specialises in endocrinology and emergency contraception, in which Astorg co-invested last February with Goldman Sachs in a deal valued in excess of €400m.

Back in 2014, the firm backed in-vitro instruments manufacturer Sebia in a partnership with Montagu through a secondary buyout valued between €1-1.2bn, taking over from Cinven, which generated a 2.4x return from the sale.


Astorg Partners – Thierry Timsit (managing partner).

PAI Partners – Edward Chandler (partner).


EquityWillkie Farr & Gallagher (legal).

Vendor – ADL, Francois Deneux, Julien Vialade (commercial due diligence); KPMG, Axel Rebaudieres, Sophie Bougerolle (financial due diligence); Fidal, Patrick Seroin (tax); Taj, Jerome Gertler (legal); Weil Gotshal & Manges, David Aknin (legal); Rothschild Corporate Finance, Julian Hudson, Cyrille Harfouche (M&A).

For more deal updates, case studies and analysis join us at the French Private Equity Forum on 10 November. More information. 

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