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Worst-performing stock gets bid for crown jewel

Most of the disposals were triggered as the stock was used as collateral for loans.

Ascendis Health is in talks to sell one of its best-performing units as the biggest South African loser on Johannesburg’s stock exchange last year battles to ensure survival.

The debt-laden maker of multivitamins, probiotics and pet nutritional supplements received an unsolicited offer for Cyprian unit Remedica, sending the stock 13% higher on Monday, the biggest jump in more than 10 months. Still, the gain must be placed in the context of a 77% slump in 2018, giving a market capitalisation of R2.8 billion ($202 million).

The shares quickly pared those gains on Tuesday, dropping 5.2% to R5.88 as of 12:51 p.m. in Johannesburg.

Remedica, which develops, manufactures and sells over 300 generic pharmaceuticals in more than 100 countries, was bought for about 260 million euros ($299 million) in 2016, more than Ascendis’s current market capitalisation. The unit was one of two described as posting particularly strong revenue growth in Ascendis’s most recent earnings report, published in September.

The deal was part of a debt-fueled acquisition spree led by former Chief Executive Officer Karsten Wellner, who had led the health company since it was founded in 2011. He was replaced just under a year ago by Thomas Thomsen, a former executive of global giants including Johnson & Johnson and Reckitt Benckiser.

With total liabilities of more than R9 billion, Thomsen started a review of its business last year, and is considering the disposal of non-core assets and units. An antiretroviral manufacturing plant in Isando, Johannesburg, was sold to Mylan in December.

Ascendis 2018 share slump has had implications for its largest shareholder, private-equity firm Coast2Coast Capital. Its Chief Executive Officer Gary Shayne, along with his spouse and associated companies, have been forced to sell or transfer almost R92 million worth of Ascendis shares since November. Most of the disposals were triggered as the stock was used as collateral for loans.

© 2019 Bloomberg L.P

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