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Karo Pharma acquires Leo Pharma drug portfolio for €260M

Stockholm's Karo Pharma AB acquired a drug portfolio from Denmark's LEO Pharma A/S for €260 million.

The medicines in the portfolio address the therapeutic areas of infectious, cardiovascular and dermatological diseases. The deal includes drugs Conotrane, Fonx, Condyline, Synalar, Mildison, Centyl, Kaleorid, Burinex, Locobase and Selexid, with the last three making up 60% of the turnover.

Karo Pharma believes the transaction, which will be effective April 4, will strengthen its presence in Scandinavia and provide a rationale for setting up operations in Finland.

The acquisition, a pure asset deal, does not include personnel or manufacturing facilities and is not dependent on approval from competition authorities.

Karo Pharma plans to finance the deal with loans and a rights issue to existing shareholders. The rights issue will be made during the second quarter of 2018 and is expected to provide the company about 1.3 billion Swedish kronor before costs.

Board chairman Anders Lönner and board members Per-Anders Johansson and Håkan Åström, who hold about 11.2% of the company's capital, agreed to sign up for their respective pro rata shares in the rights issue.

The remaining part is guaranteed by Lönner, who will be paid with 2.5% of the guaranteed amount.

As a result of the deal, Karo Pharma expects its organizational costs to increase by about 50 million kronor annually, mainly due to an expansion of its marketing division.

Karo Pharma develops healthcare products for elderly people in Sweden, Norway, Denmark and Finland.

As of Feb. 28, US$1 was equivalent to 8.27 Swedish kronor.