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Press Releases

STADA bids for Serbian Hemofarm – access to 59% contractually agreed

Key information at a glance:

  • STADA submit public takeover offer to the Serbian securities commission for 100% of Hemofarm shares

  • STADA offers CSD 12,345 (currently approx. EUR 146,97) per Hemofarm share in cash / corresponds to total purchase price for Hemofarm of approx. EUR 485 million

  • STADA has contractually agreed access to 59% of the shares

  • Financing through existing STADA credit lines

  • Takeover welcomed by Hemofarm management

  • STADA gains access to additional important growth markets in Eastern Europe

  • Positive contribution to STADA net income expected already in 2007

STADA Arzneimittel AG is to completely take over the Serbian Pharmaceuticals Group Hemofarm a.d., Vrsac, Serbia. To this end, STADA will in Serbia, today, on July 14, 2006, submit a public takeover offer to the Commission for Securities of the Republic of Serbia for all 3.3 million shares of the company which has been listed on the stock exchange in Belgrade since 2002. Hemofarm’s management has welcomed STADA’s takeover offer.

Within the framework of this takeover offer, which is valid for 21 days from publication of the takeover offer, STADA is offering CSD 12,345 (currently approx. EUR 146.97) for each Hemofarm share. This corresponds to a total purchase price for 100% of Hemofarm's shares of approx. CSD 40,739 million (currently approx. EUR 485 million).

The execution of the takeover offer still requires the approval of the Serbian securities commission as well as the responsible anti-trust authorities. In addition, the takeover offer is only valid if a minimum of 67% of the shares are sold within the framework of the public takeover offer.

"With the acquisition of this important generics supplier, STADA continues its expansion into international growth markets," says Hartmut Retzlaff, Chairman of the Executive Board at STADA. "With the takeover of Hemofarm we open up further important markets in Eastern Europe and strengthen our production and development capacity at a first-class level in locations that are extremely attractive from a cost and tax perspective."

Prior to the takeover offer, STADA had already reached contractual agreements with various shareholders, including institutional investors as well as members of Hemofarm’s management, under which they will sell their shares to STADA within the framework of this takeover offer. It has thus been contractually agreed that STADA will have access to at least 59% of Hemofarm’s shares. Should STADA, within the framework of this takeover offer, be able to acquire at least 95% of Hemofarm’s shares, STADA will strive, from today’s perspective, within the framework of a squeeze-out procedure under Serbian law, to also acquire the remaining shares and so to achieve 100% ownership of Hemofarm.

STADA will finance the acquisition via existing credit lines. A capital increase is not required for the current financing. Operating profit is not expected to be effected by the acquisition because the expectation is that, already from 2007, the profit contribution from Hemofarm will exceed the interest expense and the depreciation/amortization. Furthermore, through the optimal utilization of the new added production capacity in the STADA Group, a cost-efficient coordination of the current development projects as well as economy of scale effects in procurement and production, STADA expects to achieve synergies in a significant amount from 2007.

"The acquisition of Hemofarm is a strategically important and value increasing step which, from today's perspective, can provide a positive contribution to STADA's net income, already in 2007," emphasizes Retzlaff. "As a publicly-listed company, Hemofarm works according to international standards and has modern, GMP certified production locations. Hemofarm's development capacity is also outstanding – they will secure an excellently filled product pipeline, also in the future. We look forward to working together with an experienced and highly qualified team," Retzlaff commented further.

Hemofarm is an important East-European generics supplier. In 2005, Hemofarm increased its sales in the local currency by approx. 30% to CSD 17,261.2 million (currently approx. EUR 205.5 million). In the same period, net income including minority interest in the local currency rose by approx. 89% to CSD 2,289.9 million (currently approx. EUR 27.3 million). The management of Hemofarm expects to continue with Hemofarm’s growth course also in the future.

The sales focus of Hemofarm is in Eastern Europe. In the home market of Serbia, as well as in Montenegro, Hemofarm is the clear market leader in the individual national pharmaceutical markets; in 2005, in these two markets, a total of 62% of Hemofarm’s sales was achieved. Further important local East European markets for Hemofarm are the CIS countries, in particular Russia, as well as Bosnia and Herzegovina and Romania. In 2005, Hemofarm was represented world-wide by 27 subsidiaries in 11 countries and employed 3,625 people as per end of 2005. The company currently has 5 production locations in various East European countries.

In conclusion, STADA CEO Retzlaff comments the strived takeover with the following words on the takeover: "The formula is simple: STADA + Hemofarm = added value in growth markets."

For more information, please contact:

STADA Arzneimittel AG
Corporate Communications
D-61118 Bad Vilbel
Tel.: +49 6101 603-113
Fax: +49 6101 603-506
e-mail: communications@stada.de

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