CVC buys 51.8% stake in Recordati for €3.03bn

The consortium – which includes Canada's pension investment manager PSP Investments and private markets specialist StepStone – acquired the Recordati family's holding company Fimei for €3.03bn. Fimei owns a 51.8% stake in Recordati, implying a total equity value for Recordati of €5.86bn – equivalent to €28.00 per share and equal to 12.9x the company's 2017 EBITDA.

The Recordati family will receive around €2.3bn in cash at the closing of the operation and €750m in the form of a deferred and subordinated long-term debt security.

Committed financing for the transaction was provided by Deutsche Bank, Credit Suisse, Jefferies and Unicredit.

Recordati CEO Andrea Recordati will reinvest alongside the consortium and stay on with the company in his current role in order to ensure continuity of the business strategy, together with Recordati's managing director and CFO Fritz Squindo. The company will use the fresh capital to bolster its growth strategy and accelerate its global expansion in the pharmaceutical industry.

CVC is required by law to launch a mandatory tender offer on the remaining shares of the company but does not intend to de-list the business from the stock exchange. The fund will acquire the shares at a price of €28.00 each, which is lower than the closing price of €34.06 recorded by the stock on Friday and the current price of €29.10 at which the stock is trading this morning (2 July). The company has a market capitalisation of around €7bn.

The GP deployed capital from its CVC Fund VII, which held a final close on its €15.5bn hard-cap in June 2017.

Company
Recordati is a global pharmaceutical group founded by Giovanni Recordati in Correggio, near Reggio Emilia, in 1926. The Milan-headquartered company was listed on the Italian stock exchange under the FTSE MIB index in 1984.

Recordati specialises in producing drugs and rare disease treatments; it has operations in Europe, North Africa, North America and Latin America, and employs 4,100 staff. The company recorded EBITDA of €454.7m in 2017, up 22.5% on the previous year, from revenues of €1.29bn, up 12% on 2016, and net debt of €484.6m. The business expects to reach a turnover in the range of €1.35-1.37bn and EBITDA between €490-500m in 2018.

People
Recordati – Andrea Recordati (CEO).
CVC Capital Partners – Giampiero Mazza (head of Italy); Cathrin Petty (head of EMEA healthcare).

Advisers
Acquirers – Rothschild (corporate finance); Gattai Minoli Agostinelli & Partners (M&A, legal); White & Case (M&A, legal); Facchini Rossi (tax).
Vendors – Jefferies International (corporate finance); Pedersoli Studio Legale (legal).

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