Goldman Sachs (GS) is a global leader and provider of investment management solutions, and they have sourced an opportunity in the pharmaceutical space. They agreed to buy Synthon International (SI) from BC Partners, a private equity firm. GS plans to ‘drive value creation through product development and operational excellence initiatives’, whilst trying to build SI’s global presence. Synthon International is not listed on a stock exchange, but it is held privately. The financial advisors that acted upon this deal included Rothschild, and Barclays who worked with the target, and Jefferies who acted alongside the bidder. The deal was announced on 16th December 2024.
The private equity firm BC Partners bought the company in 2019 when it was generating an EBITDA of $60mn and they managed to increase earnings to $140mn within 5 years. They managed to do this by having a relentless focus on R&D and increasing the company's sales force. As part of the deal terms with GS, they will still retain a 25% stake in SI.
Private equity companies are sitting on a record of over 28,000 unsold companies, worth roughly around $3tn. This has largely been due to the macroeconomic environment, where high interest rates have contributed to a takeover slowdown and a downturn in the initial public offering market. However, BC Partners have managed to stay competitive in this space, bringing their total of exited positions to around $13bn in the past 18 months.
SI, a Netherlands-based company, has a unique ability to produce, develop, out-license, and manufacture complex drugs. They have a direct presence in over eight countries, with four R&D labs, as well as four manufacturing sites located in Spain, the Czech Republic, Argentina, and Chile. Additionally, they have a strong intellectual property formation team, that allows their new drugs to be patented and not copied. By partnering with GS, they can replace branded medicines, which is important because their intellectual property protections are expiring in the next 10-15 years. SI must do this, new medicines face less competition and they can build their market presence with products that hold a monopoly on the market.
Furthermore, they have a customer-centric focus, whereby they want to increase the affordability of SI products to all their patients worldwide and use their manufacturing base to capture the growth within generic medicines. Their portfolio consists of treatments that help aid cancer, cardiovascular issues, and sclerosis, using over 70 molecules in their medicines. Importantly, they are supplemented by the unparalleled expertise of their teams. Lastly, the deal is expected to close in the second quarter of 2025.
Written by: Jansher Verscht
Sources: Mergerlinks, Financial Times, Goldman Sachs Asset Management
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