Active Pharmaceutical Ingredients (Norway) - Jan 2008

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01 January 2008

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3i has backed the management buyout of Active Pharmaceutical Ingredients (API), an Oslo-based supplier and developer of pharmaceutical ingredients, from NYSE-listed Alpharma API for $395m. 3i has been in contact with the CEO of the company for some time to discuss the prospects of a potential buyout, and the US parent company agreed to sell its stake at the beginning of the year. Bank of America held the auction process.

3i was attracted to the deal because of the business’ production know-how, its management and prospects for further growth in the global market. The company also fits well into 3i’s healthcare portfolio which is a key sector for the investment group. Growth will be secured both by organic escalation and increasing product assortment. The Active Pharmaceutical Ingredients name will be kept for the first 12 months before a newco is decided upon. The transaction is expected to close in the second quarter of 2008, pending regulatory and approvals and customary closing conditions.

Debt structure

The debt to support the transaction was supplied by GE (Global co-ordinator), Calyon, Danske Bank, European Capital Financial Services Limited and HSH Nordbank AG.

Company

Oslo-based API produces, manufactures and markets a line of fermentation-based active pharmaceutical ingredients, such as Vancomycin, Bacitracin and Polymyxin, mainly for third parties. The company has long traditions in Norway dating back to 1903 and it currently has 700 employees. Revenues totalled $138.7m and operating income was $30.7m in the first nine months of 2007. Apart from the headquartered in Oslo, the business has production facilities in Copenhagen, Budapest and Taizhou (China).

People

3i industrialist in residence, Peter Chambré, has been appointed non-executive chairman for the company upon completion. Bernie Schuler, lead partner healthcare at 3i, worked on the deal and will take a seat on the board.

Advisers

Equity - ERM, (Environmental Due Diligence)Equity - Linklaters, (Legal)Equity - Marsh, (Insurance Due Diligence)Equity - Merrill Lynch , (Corporate Finance)Equity - PricewaterhouseCoopers, (Financial Due Diligence)Equity - PricewaterhouseCoopers, (Tax)Vendor - Bank of America, (Corporate Finance)Vendor - Cravath Swaine & Moore, (Legal)Vendor - Wiersholm Mellbye & Bech, (Legal)