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AMRI to Acquire Cedarburg Pharmaceuticals for $38.2M

By R&D Editors | March 24, 2014

Albany Molecular Research Inc. (AMRI) announced that it has signed a definitive agreement to acquire all the outstanding shares of Cedarburg Pharmaceuticals Inc. for $38.2 million in cash. The transaction, including $2.8 million of assumed liabilities, is valued at $41 million.
 
Cedarburg Pharmaceuticals is a contract developer and manufacturer of technically complex active pharmaceutical ingredients (API’s) for both generic and branded customers. The transaction is consistent with AMRI’s strategy to be the preeminent supplier of custom and complex drug development services and product to both the branded and generic pharmaceutical industry.
 
“We are very excited to be joining efforts with Cedarburg as they bring a unique blend of expertise in complex API, a scalable business infrastructure and extensive customer relationships that will augment our existing capabilities and services,” said William Marth, AMRI’s president and chief executive officer. “This transaction represents an important first step in building out our API capabilities, broadens our offerings and customer base and provides us with an ideal platform to pursue additional value creation opportunities.”
 
Located in Grafton, Wis., Cedarburg Pharmaceuticals is a trusted, long-time partner to many of the industry’s leading pharmaceutical companies and is well respected for its expertise in developing technically differentiated APIs, its reliability of supply and track record of quality. Cedarburg’s core capabilities include controlled substances, steroids, prostaglandins, vitamin D analogs, conjugation chemistry and inorganics for the analgesic, ophthalmology and oncology therapeutic areas. Cedarburg has provided API development and manufacturing support for 13 approved products. Cedarburg’s attractive development pipeline includes multiple late stage products and is expected to be an important contributor for future growth.
 
On a stand-alone basis, Cedarburg’s forecasted full year 2014 revenue is approximately $19 million, with adjusted EBITDA between $5.5 million and $5.7 million, implying a purchase price multiple of approximately 2 times 2014 revenue and approximately 7 times 2014 adjusted EBITDA at the midpoint of the range. Adjusted EBITDA excludes any deal related costs or purchase accounting impacts.
 
The transaction is expected to close in early April 2014. Based on the anticipated timing of the close, the acquisition is expected to add between $13 and $14 million to AMRI’s revenue in 2014. AMRI anticipates full year run-rate synergies of approximately $1.5 million of EBITDA within 12 months of closing and the acquisition is expected to be accretive to AMRI’s 2014 adjusted diluted EPS in the range of $0.06 to $0.07 per share. Items excluded from non-GAAP financial results are expected to include all transaction-related costs, including amortization of intangible assets. The acquisition and associated fees are expected to be financed through cash currently held by AMRI.
 
Cedarburg is expected to continue to operate independently within AMRI’s API business unit. Chuck Boland, currently co-founder and executive vice president of business development will lead the Cedarburg team and report into George Svokos, AMRI’s senior vice president sales and general manager, API.
 
Date: March 24, 2014
Source: AMRI
 

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