Hikma Buys 63.9% Stake in Promopharm for $111.2 Million

By Makiko Kitamura

(Bloomberg) Hikma Pharmaceuticals Plc (HIK) bought a controlling stake in Moroccan drugmaker Societe de Promotion Pharmaceutique du Maghreb SA to gain entry to the country’s burgeoning market for medicines.

Hikma purchased 63.9 percent of the company, also known as Promopharm, for $111.2 million in cash and will start a tender offer for the rest of the company, said the London-based drugmaker in a statement today. The acquisition will be funded through a seven-year syndicated loan, Hikma said.

Sales of pharmaceutical products in Morocco, which reached $1.7 billion last year, are expected to grow 9 percent annually between 2010 and 2014, said Hikma, which was founded in Amman, Jordan. Promopharm is the ninth-largest drugmaker in the North African nation with a 3.5 percent share of the market, earning more than $45 million in yearly revenue, Hikma said.

“It’s a play on developing markets, and as frontier markets go, Morocco is relatively stable,” said Les Funtleyder, a portfolio manager and health-care strategist at Miller Tabak & Co. in New York. “North Africa is Hikma’s sweet spot.”

Hikma has identified 20 anti-infective, central nervous system, cardiovascular and diabetes products for distribution in Morocco, the company said today.

“Entering the Moroccan market has been a strategic priority for Hikma for some time,” Said Darwazah, chief executive officer of Hikma, said in the statement. “We will continue to pursue further value-enhancing opportunities across our operations.”

Hikma fell 1.1 percent to close at 563.5 pence in London today. The stock has lost 31 percent so far this year.