Hochdorf sells majority stake of Pharmalys Group for US$101m
09 Dec 2019 --- Swiss dairy and formula player Hochdorf has sold its majority stake (51 percent) in companies of the Pharmalys Group to Pharmalys Invest Holding, controlled by Amir Mechria. According to the company, the selling price reached approximately CHF 100 million (US$101 million) and the closing is expected within the next few days. The decision is a major step toward the company’s financial recovery and a bid to increase strategic flexibility, according to the company. However, the cooperation between the company and the Pharmalys Group is to be maintained, while Pharmalys Invest Holding remains the largest shareholder of the Hochdorf Group.
The payment will be made in several installments until September 2020. Further financial details of the transaction have not been disclosed. “Hochdorf will disclose the complete financial details in the Annual Report 2019,” Dr. Christoph Hug, Head of Corporate Communications Hochdorf Group, tells NutritionInsight.
The agreement to sell the 51 percent shares in Pharmalys Laboratories SA, Pharmalys Africa Sarl and Pharmalys Tunisia SA to Pharmalys Invest Holding was signed on December 6, 2019, after market closing.
Hochdorf seeks to regain its strategic flexibility and take an important step towards financial recovery.“Hochdorf regains its strategic flexibility and takes an important step towards financial recovery. It is also important that the cooperation between Hochdorf and Pharmalys is to be continued,” Dr. Hug adds.
In its 2019 half-year financial report, it was noted that due to poor performance the Pharmalys investment was under review. At the end of 2016, Hochdorf acquired a 51 percent stake in three companies of the Pharmalys Group in hopes of accelerating the expansion of its baby care business. Around CHF 245 million (US$247 million) was paid until March 2018, of which around CHF 114 million (US$115 million) in cash and CHF 131 million (US$132 million) in the form of a mandatory convertible bond.
However, the business model of Pharmalys gave the Hochdorf executive bodies little transparency in their operational implementation and little influence on relevant parts of the value chain. In addition, the financing of the net current assets of Pharmalys proved to be extremely capital-intensive.
Hochdorf maintains that its focus on the high-growth baby care division remains unchanged despite the sale of the Pharmalys shares. Pharmalys also notes that it intends to continue marketing the Swiss baby food produced by Hochdorf. In its own sales of baby food to end consumers, Hochdorf will increasingly work with the traditional Swiss brand Bimbosan and the Babina brand in the future.
Hochdorf also notes that due to the currently low sales in the baby care segment and the technical challenges posed by its new spray tower line in Sulgen, Switzerland, however, a clearly negative result is still expected for the current fiscal year.
By Kristiana Lalou
