Sale nets UDG Healthcare €80m to cut debt and invest
The Dublin-based diversified healthcare services group — previously known as United Drug — yesterday announced the €82m cash sale of its 50% share of the UniDrug Distribution business to its joint-venture partner, Alliance Boots.
The UniDrug business provides pre-wholesale supply chain solutions to the healthcare industry in the UK. It contributed a net after-tax profit of €5.6m to UDG in its last financial year.
The carrying value of UDG’s investment in the venture is €12m and a gain on disposal of €70m is estimated.
The group said it will use the proceeds for “general corporate purposes” and the pay-down of debt.
Management pointed to the ongoing convergence of the pre-wholesale and wholesale distribution markets in the UK, leading to a “reduced fit” for UniDrug in the UDG landscape as the reason for the sale.
“The opportunity to exit the joint-venture allows UDG Healthcare to release over €80m to both reduce debt and for further investment in areas of our business which fit strategically with the future development of the group,” said Liam FitzGerald, UDG’s chief executive, who added that the UniDrug business had been “a very successful investment” for the group.
UDG said yesterday it will continue its long-term wholesale service relationship with Alliance Boots (which is set to be bought by US pharmacy giant, Walgreens) on the islandof Ireland.
In a trading update, published earlier this month, UDG said that it saw year-on-year revenue growth for both the third quarter of its current financial year (the three months to the end of June) and the first nine months; reiterating its guidance of 5%-9% adjusted diluted earnings per share growth (in constant currency terms) for the 12 months to the end of September.
The now London-listed UDG’s share price, was up by nearly 1% yesterday, around the £3.45 mark.
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