CVC buys Italian pharma company Genetic

Alessia Argentieri
20 July 2020

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CVC Capital Partners has acquired a majority stake in Italian pharmaceutical company Genetic Group.

The GP deployed capital from CVC Strategic Opportunities II, which held a final close on €4.6bn in July 2019. The fund targets large-cap companies with tickets ranging from €250m to €750m throughout western Europe and North America. It seeks stable opportunities that require a longer-term outlook and aims to hold investments for 6-12 years. The fund has a global investor base made up of sovereign wealth funds, public and private pensions, financial institutions, endowments and family offices.

CVC invested in Genetic in partnership with the founding Pavese family. Following the deal, Rocco Pavese will remain as CEO of the business and will lead its R&D initiatives.

The founding family, who controlled the business via Oxford Pharma Holding, had mandated UBS to find a seller in 2019. They entered into exclusive negotiations with CVC in June, according to press reports.

According to Mergermarket, CVC's offer came in the region of €280-300m, with the transaction covering the sale of 60-70% of Genetic's capita.

CVC competed against KKR and ProA Capital in the final stage of the auction. Although KKR was reportedly seen as frontrunner in the auction, CVC was able to put a more compelling offer on the table due to the commercial synergies between Genetic and its portfolio company DFE Pharma, a German excipients manufacturer for the pharmaceutical industry.

CVC acquired a 50% stake in DFE Pharma from New Zealand-listed dairy company Fonterra for NZD 633m (€363m) last year.

Company
Headquartered in Fisciano, Genetic is a pharma contract development and manufacturing organisation (CDMO) that focuses on the development and supply of products for respiratory, ophthalmic and oncology therapeutics.

The company's primary expertise is in the development of respiratory and ophthalmology products that are delivered via unit-dose blow-fill-seal technology, pressurised metered dose inhalers, nasal sprays, and eye drops and collyrium. Genetic's products are commercialised by a network of pharma partners internationally, as well as by its own distribution arm, Max Farma, in Italy. The company has sales in Italy and more than 20 countries globally, with 50 marketed products.

People
CVC – Michael Lavrysen (senior managing director of CVC Strategic Opportunities); Giorgio De Palma (senior managing director of CVC Italy).
Genetic Group – Rocco Pavese (founder, CEO).

Advisers
Company – UBS (corporate finance); EY (financial due diligence), LED Tax (legal); NCTM (legal).
Equity – Rothschild & Co (corporate finance); Gattai Minoli Agostinelli & Partners (legal); Facchini Rossi Michelutti (tax).