Aspen in R524.2m BEE deal

Johannesburg - Aspen Pharmacare Holdings Ltd (APN), the African continent's largest manufacturer of generic medicines, has unveiled the details of a black economic empowerment (BEE) transaction that will see black shareholders gain a 17.9% stake, in terms of both equity ownership and voting rights, in the company, in a multi-faceted deal valued at R524.2m.

Announcing the transaction on Thursday, Aspen said a new BEE company,Imithi Investments, would be acquiring 13.4m new Aspen ordinary shares and 17.6m new variable rate voting, convertible, redeemable, cumulative Aspen preference shares, and the Industrial Development Corporation would acquire 6.1m new Aspen ordinary shares, over which Imithi would hold a call option.

Imithi is a broad-based grouping of various BEE entities, including Amalgum Investments 35 (with 50.4% stake), a subsidiary of Ceppwawu Investments, which in turn is owned by the Ceppwawu Development Trust, part of the Chemical, Energy, Paper, Printing, Wood and Allied Workers Union (Ceppwawu).

Two Ceppwawu subsidiaries already hold 7.5% of Aspen's total issued share capital following the transaction.

Masibulele Pharmaceuticals will have a 16.5% stake in Imithi.

Blue Nightingale will have a 16.5% stake in Imithi.

Another 16.5% shareholder in Imithi will be Business Ventures 670, an SPV drawing together shareholders from previously disadvantaged groups with leadership positions in the healthcare industry.

Finally, the IDC will have a 0.1% stake in Imithi while it is a funder of Imithi.

In terms of the transaction, Imithi will acquire 13.4m new Aspen ordinary shares at R11.00 per share, which will be issued by Aspen by way of a specific issue of shares for cash for a total consideration of R147.4m.

Imithi will acquire 17.6m Aspen preference shares at R21.41, which will be issued by Aspen by way of a specific use of shares for cash for a total consideration of R376.8m.

The IDC will acquire 6.1m new Aspen ordinary shares at R19.80 per share, which be issued by Aspen by way of a specific issue of shares for cash for a total consideration of R120.8m.

The acquisitions by Imithi will be funded as to 2.5% of the transaction value (or R13.1m) by the shareholders of Imithi. The balance of R511.1m will be funded by the subscription by the IDC for preference shares in Imithi.

Following the completion of the BEE transaction, Aspen will also undertake a pro-rata offer to acquire 6.5% of the Aspen ordinary shares held by its shareholders other than its BEE shareholders, the group said. The offer price would be R21.41 per Aspen ordinary share, with the total consideration payable R434m for 20.27m Aspen shares.

The transactions are subject to several conditions precedent, including regulatory and shareholder approvals.