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Merck deal set to spur Aspen bond sale
FMCG SUPPLIER NEWS
IOL Business/ Bloomberg - Jul 17th, 08:49
Aspen Pharmacare’s purchase of a Merck division would probably spur South Africa’s largest drug maker to sell its first bonds to diversify debt, money manager Anchor Capital said on Friday.
Aspen said last month that it would buy a manufacturing unit from Merck, the second-largest US drug maker, with the option to add a products division in a deal valued at $1 billion (R10bn).
The acquisition would be partly financed by new debt facilities locally and overseas, chief executive Stephen Saad said then.
“I’m surprised Aspen hasn’t already issued bonds, but with the growth they are doing, I’d imagine they are looking at that,” said Peter Armitage, who manages assets of R200 million at Anchor Capital.
“There are more acquisitions to come and any bonds they do issue would be well received.” Aspen, which has financed previous growth with bank loans, expected a cost of funding of 5 percent for new debt, deputy chief executive Gus Attridge said on June 27.
CFR Pharmaceuticals, a Chilean drug maker that will enter Africa if a bid this month for Johannesburg-based Adcock Ingram is successful, has a $300m bond due in December 2022 with a yield of 5.8 percent.
Merck’s $1bn bond due in May 2018 yields 1.7 percent. Aspen had outstanding debt of R10.4bn, according to its first-half earnings published on March 7.
The stock shed 0.19 percent to close at R233.49 on the JSE yesterday. – Bloomberg © Independent On-line 2013. All rights reserved
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