Aspen Predicts Higher Earnings After Purchases From Glaxo, Merck

Aspen Pharmacare Holdings Ltd. (APN), Africa’s largest generic-drugs maker, said it expects the purchase of manufacturing sites from GlaxoSmithKline Plc and Merck & Co. to boost earnings this year.

Growth will be “strongly supplemented by contributions to the international and Asia Pacific territories” from the completion of the transactions, particularly in the second half of the current fiscal year, which began in July, the Durban, South Africa-based company said today in a statement.

Net income climbed 25 percent to 3.52 billion rand ($354 million) in the year through June as sales from international businesses rose, Aspen said. Revenue increased 27 percent to 19.3 billion rand, beating the 19.21 billion-rand estimate of nine analysts surveyed by Bloomberg.

Aspen, which supplies medicines in more than 150 countries, agreed to a $1 billion deal in June to buy pharmaceutical assets from Merck. It has offered to buy heart medicines Arixtra and Fraxiparine from Glaxo (GSK), as well as a related manufacturing site in France, for about 700 million pounds ($1.1 billion).

Debt levels will “initially be close to Aspen’s self-imposed limits, but this gearing is expected to reduce quite rapidly through strong operational cash flows,” the company said today.

The shares rose for a fifth day, adding 2.8 percent to 250.80 rand as of 1:48 p.m. in Johannesburg. The stock has gained 48 percent this year and is trading at the highest price since at least 1990.

Aspen maintained its dividend at 157 cents.

To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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