EQT to take Karo Pharma private for SEK 6bn

Oscar Geen
29 October 2018

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EQT Partners has made a SEK 5,973bn (тЌ575m) cash offer for Stockholm-based pharmaceutical company Karo Pharma.

The offer of SEK 36.90 per share has been unanimously recommended to shareholders by the company's board of directors. It represents a premium of 25.3% on the share price at closing on Friday 26 October and 17.2% on the weighted average price for the last 30 days of trading.

EQT will initially finance the bid with 100% equity, drawn from the €10.75bn EQT VIII fund. The GP declined to comment on plans to refinance or bring in co-investors to reduce the equity contribution.

The board of directors have declared that they intend to tender their shares, representing approximately 13.6% of the total share capital.

EQT stated that neither the fund nor holding company owned or controlled any shares in the business in the six months prior to the offer.

The GP plans to support Karo's growth by providing it with access to its industrial network and institutional knowledge of the healthcare market; strengthening organic growth through operational organisation; and providing additional capital for strategically important and synergetic acquisitions, according to a presentation.

The presentation lists the GP's investments in Certara, Lima Corporate, Curaeos, Sivantos, Atos, Ottobock, Terveystalo and Min Doktor as evidence of its track record in European healthcare.

The acceptance period will run from 13 November to 10 December and EQT must acquire 90% of the company's outstanding share capital in order to complete the transaction.

Karo is a pharmaceutical company listed on the Nasdaq Stockholm Mid Cap. The business was founded in 1987 and is headquartered in Stockholm, with operations across the Nordic region. It develops products including over-the-counter drugs, prescription medicine and medical devices, and sells directly to healthcare providers and to pharmacies. The business reported sales of SEK 756.5m for the first six months of 2018 (an increase of 168.5% on the previous year) and EBITDA of SEK 321m (an increase of 243.4%) for the same period.