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Deal in focus: IK sells Vemedia to Charterhouse Capital

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IK Investment Partners recently exited pharmaceutical company Vemedia in a secondary buyout to Charterhouse Capital Partners. Alice Tchernookova investigates how the vendor helped the group grow from a Benelux-focused business into a pan-European player

The sale, which according to information published on Vemedia's website was worth €375m, was completely very rapidly, with no competing bids and no auction process.

"Once Charterhouse had completed the acquisition of Cooper in early 2016, they approached us almost immediately," says partner Remko Hilhorst, in charge of the deal at IK. "We agreed on a price, and we did the deal."

International law firm Allen & Overy acted as IK's legal adviser on the transaction, with no corporate finance or M&A advice solicited. The seller made more than 2x money on the exit, a source close to the deal told unquote".

At the time of acquisition by IK in 2012, Vemedia was a Belgium-based company headquartered in in the Flemish province of Kortrijk, and operated in the Benelux region only. IK's ambition as it entered the group was to transform it into a global player, applying a buy-and-build strategy.

We had to take it private as having many shareholders in the group would have complicated things significantly, and would have impeded on the implementation of our strategy" - Remko Hilhorst, IK Investment Partners

When the GP acquired a majority stake from founder and CEO Yvan Vindevogel, the business was a listed entity. "We had to take it private as having many shareholders in the group would have complicated things significantly, and would have impeded on the implementation of our strategy," explains Hilhorst.

He adds: "The owner at the time was looking for a strong partner to continue the group's consolidation in the industry; the business was listed with Mr Vindevogel as controlling shareholder, and it had become hard for Vemedia to raise substantial additional capital to make further acquisitions."

At the time of investment, the owner had diluted himself to around 55%, unquote" understands. A subsequent acquisition would have consequently resulted in a further reduction of his stake in the group, and to a consequent loss of control over the business.

This is how in 2012, Vindevogel decided for the first time to turn to a private equity fund, deeming it a better option to have one single majority shareholder to manage the group rather than a few minority ones.

Building for the future
With IK's backing, Vemedia Pharma doubled in size with revenues reaching the €150m mark last year, compared to €75m in 2012. Early on, the GP had identified target companies for bolt-on acquisitions that would help it grow into a European OTC drugs platform.

IK first bolted-on Excilor, a Belgian company specialised in medical foot care. The GP further made a significant push in the French market with six acquisitions, the most significant of which was beauty nutritional supplement specialist Oenobiol, previously owned by Sanofi. Other investments included consumer healthcare group Stardea in Italy, bolted on in February this year, as well as Belgium-based Labima in June 2015.

As the new majority shareholder, alongside the CEO and management who retain a minority stake in the group, Charterhouse Capital is merging French portfolio company Cooper with Vemedia. The new entity should generate €400m of sales and a €100m EBITDA, with a 790 headcount and operations in 45 countries, directly and through third parties.

We had been in the business for three-and-a-half years; the next step had to be a significant acquisition like Cooper, but this was too big a deal for us, so it was best to pass it on to the next owner" - Remko Hilhorst, IK Investment Partners

"It's a very logical move from an industry perspective. It makes sense to put those businesses together," says Hilhorst, pointing to the fact that Cooper will highly benefit from Vemedia's European presence.

From IK's perspective, the time had come to make a move, the partner explains: "We had been in the business for three-and-a-half years; the next step had to be a significant acquisition like Cooper, but this was too big a deal for us, so it was best to pass it on to the next owner - a slightly bigger fund."

Charterhouse now wants to take the next step in Cooper's development, planning to grow it on an international scale. The new investor said it would work with both management teams over the coming months to identify consolidation opportunities.

Simultaneously with the sale, the group announced the acquisition of Vision Healthcare - a €10m Netherlands-based healthcare company made up of five brands. Other bolt-on acquisitions should soon follow up.

People
IK Investment Partners - Remko Hilhorst (partner); Frederik Jacobs (associate).

Advisers
Vendor - Allen & Overy (legal).