Orion Corporation ("Orion") announced on 23 January 2018 that it was evaluating strategic alternatives of the Group's Orion Diagnostica business division and had decided to investigate the possible sale of Orion Diagnostica as one alternative. Orion has today signed an agreement on the sale of all shares in Orion Diagnostica Oy (i.e. the Orion Diagnostica business division) to an investment fund managed by Axcel Management A/S, a leading Nordic private equity investment company ("Axcel"). The Closing of the transaction is expected to take place during the second quarter of 2018. The Closing is not conditional upon the parties obtaining approvals from competition law or other authorities or fulfilment of other preconditions.
The fixed purchase price is approximately EUR 163 million. In addition, Orion has a possibility to receive as a variable component of EUR 60 million maximum. The payment of variable component is based on return on investment for Axcel at the time of their exit. Orion estimates to recognise a capital gain of about EUR 128 million in other operating income for 2018. Due to the uncertainty relating to the variable component, the estimated capital gain does not include any part of the variable component.
"Orion Diagnostica has operated as an independent business and it has no material business synergies with Orion's other operations. The sale of the division will allow us to further focus on growth and achieving our financial goals. Orion is currently working on numerous projects that target growth in our core area of the Pharmaceuticals business. For example, we are actively evaluating late stage in-licensing opportunities. We also continue to invest in our own research and development activities, with new clinical trials, for example. The capital gain from the transaction will strengthen our equity position and maintain our ability to achieve our dividend distribution objective", says Timo Lappalainen, President and CEO of Orion.
"Together with Orion Diagnostica's management and employees, we intend to further develop the company into an even stronger operator in the global diagnostics market. On the back of an attractive customer proposition and a strong market position, we see great opportunity to grow Orion Diagnostica further both geographically and by expanding its product offering", says Thomas Blomqvist, Partner at Axcel.
In the Orion Group Orion Diagnostica is a second business area, in addition to the Pharmaceuticals business area, and in the Financial Statements it is reported as its own segment. During the 2017 financial period, Orion Diagnostica's net sales were EUR 54 million (about 5% of the Orion Group's net sales) and its operating profit was EUR 8.9 million (about 3% of the Group's operating profit). Its assets were EUR 52 million (about 5% of the Group's assets). At the end of 2017 Orion Diagnostica had 282 employees (about 8% of the Orion Group's employees).
Orion Diagnostica operates as an independent business, and it has no material business synergies with the Pharmaceuticals business.
As a result of the sale of Orion Diagnostica, Orion is updating its outlook for 2018 that was announced on 7 February 2018. Following the transaction Orion Diagnostica business will be reported as a discontinued operation. In the future, the Orion Group will have only one reporting segment, Pharmaceuticals business.
Updated outlook announced on 20 April 2018:
Due to generic and price competition Orion estimates that in 2018 the net sales excluding Orion Diagnostica will be at the same level or slightly lower than in 2017 (net sales were EUR 1,034 million excluding Orion Diagnostica in 2017).
Orion continues persistent actions to generate growth. Due to the estimated sales development and these actions the operating profit excluding Orion Diagnostica and material capital gains is estimated to be lower than in 2017 (operating profit excluding Orion Diagnostica and capital gains was EUR 284 million in 2017).
Orion estimates to recognise EUR 128 million capital gain in other operating income from the sale of Orion Diagnostica at the closing of the transaction. Due to the uncertainty relating to the variable component included in the transaction, the estimated capital gain does not include any part of the variable component.
Previous outlook announced on 7 February 2018:
Due to generic and price competition we estimate that in 2018 net sales will be at the same level or slightly lower than in 2017 (net sales were EUR 1,085 million in 2017).
Orion continues persistent actions to generate growth. Due to the estimated sales development and these actions the operating profit excluding material capital gains is estimated to be lower than in 2017 (operating profit excluding capital gains was EUR 293 million in 2017).
| Timo Lappalainen |
President and CEO
| Olli Huotari |
SVP, Corporate Functions
Jari Karlson, CFO, Orion Corporation
tel. +358 (0)50 966 2883
Orionintie 1A, FI-02200 Espoo, Finland
Orion is a globally operating Finnish pharmaceutical company - a builder of well-being. Orion develops, manufactures and markets human and veterinary pharmaceuticals and active pharmaceutical ingredients. The company is continuously developing new drugs and treatment methods. The core therapy areas of Orion's pharmaceutical R&D are central nervous system (CNS) disorders, oncology and respiratory diseases for which Orion develops inhaled Easyhaler® pulmonary drugs. Orion's adjusted net sales in 2017 amounted to EUR 1,034 million and the company had about 3,200 employees. Orion's A and B shares are listed on Nasdaq Helsinki.
Founded in 1994 by a group of Denmark's largest financial and industrial institutions, Axcel Management is a pan-Nordic private equity firm focusing on mid-market companies and has a broad base of both Nordic and international investors. Axcel has raised five funds with total committed capital of around EUR 2 billion to date. These funds have made 50 platform investments, approximately 100 major add-on investments and 39 exits. Axcel currently owns eleven companies with combined annual revenue of around EUR 1.4 billion and some 6,300 employees.