(MENAFN- ProactiveInvestors)
Laval Quebec based pharmaceutical giant Valeant (CSE:VRX) is rumored to be in talks to acquire Egypt’s Amoun Pharmaceutical for US$700-800 million.
According to Bloomberg Amoun has hired Jefferies Group to study sale though CEO Mohamed Roushdy said that it has yet to reach a deal. Egypt’s al-Ahram daily said that Amoun would consider launching an IPO in the Egyptian stock market should the sale not go through.
Amoun one of the largest drug makers in Egypt and the developing world specializes in the production distribution and export of pharmaceuticals for humans and animal consumption.
With strong agricultural growth in many African countries thanks to the adoption of mineral fertilizers and other efficiency improving techniques the market for veterinary focused products is set to sharply increase and Amoun would give Valeant a strong base from which to address this demand.
Should the transaction be concluded Valeant will have gained access to the growing animal health sector. Both parties involved in the negotiations have refused to offer any related comments for the time being.
Since 2006 Amoun Pharmaceutical has been owned and controlled by a conglomerate that includes Capital Group Concord International Investments and the Rohatyn Group. The grouping which paid US$450 million for the company.
Valeant has earned considerable attention thanks to its made in Laval ‘Jublia’ nail fungus treatment. Valiant also manufactures in behalf of France’s Sanofi but it is gradually replacing these with others inherited through its purchase of US based Salix for which it paid US$15 billion.
Valeant has been headquartered in Laval in 2012 thanks also to financial incentives offered by the government of Quebec government. The offices of its CEO Michael Pearson and those of other senior management members of the company however are located in the suburbs of New York City.
Valeant has 450 employees in Quebec reflecting strong growth given that they more than doubled since 2012 when they numbered 200. As part of the agreement with Quebec the company must maintain at least 300 jobs in the province.
Shares of Valeant were trading at a record high of C$285 up 3.8% on the Toronto Stock Exchange. The stock has gained more than 100% over the last 12 months and it boasts the third largest market capitalization in Canada at US$96 billion preceded only by Royal Bank and TD Bank.
In recent years pharma companies have sought to expand research and manufacturing facilities in emerging markets to reduce costs. Egypt despite its political challenges has seen some of the highest pharmaceutical sales among emerging markets in recent years.
After three years of political and economic instability Egypt is trying to resume growth which could reach 4% in 2014/2015 with a set target rate of 7% in 2018. The government intends to achieve this through by attracting investment from other countries in the Middle East and North Africa region (MENA) notably Lebanon as well as from Europe North America and Asia.
Egypt is home to the largest pharmaceutical manufacturing industry in MENA countries occupying a 30% market share and it continues to wanting to increase its production capacity.
According to a study by the Oxford Business Group the Ministry of Investment announced the construction of 76 new manufacturing facilities in hopes of raising exports which rose from 10 to 20% per year over the last five years and achieve a US1 billion sales target in 2015.
Multinationals GlaxoSmithKline Novartis and Pfizer all have a presence in Egypt.
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